Monday

25th Jun 2018

Italy presents anti-austerity roadmap

  • "The European project is suffering an unparalleled crisis," Renzi's government says (Photo: ec.europa.eu)

Engaged in a policy struggle with the European Commission, Italian prime minister Matteo Renzi is calling for more flexible fiscal rules, growth policies, a eurozone budget and cost sharing of the migrant crisis.



The demands, which Rome says are "a far-reaching policy agenda and concrete proposals", are included in a nine-page document published on Monday (22 February) by the Italian ministry of economy and finances ahead of a visit to Rome by commission president Jean-Claude Juncker.

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"Fiscal rules should prove their adequacy to cope with a challenging economic environment," says the document, entitled A Shared European Policy Strategy for Growth, Jobs, and Stability.

"A framework designed for normal conditions of growth and inflation has proved incapable to tackle effectively the impact of very low nominal growth on potential growth and on debt dynamics," it notes.

"These shortcomings have implications for the measurement of fiscal indicators on which policy recommendations are based and should be addressed. Price developments should be more effectively embedded in fiscal rules," the document adds.

Renzi's governement, which has been asking for EU flexibility in the assessement of member states' budgets, says the commission’s communication on flexibility in the Stability and Growth Pact "marked a step forward in improving the policy mix".

"It creates the appropriate incentives for reforms and investment. It strengthens the coordination between structural and fiscal policies triggering a virtuous circle: structural action and investments boost medium-term growth thus supporting consolidation of public finance," it says in the document.

On the migration crisis, Italy, which is a front line country, says that sharing responsibility for the management of EU external borders "would represent a powerful response".

It also calls for a "mutualised funding mechanism" of EU border management, "which could entail issuance of common bonds". Already floated during the eurozone crisis, the idea of launching eurobonds has always been ruled out by Germany.

Again aiming at Germany and the policies pursued so far by the commission, the document states that "risk sharing and mutualisation offer a powerful incentive to abide by the rules and prevent opportunistic behaviour".

Renzi's government also calls for a eurozone budget managed by a eurozone finance minister.

Juncker will meet Renzi and other Italian officials on Friday (26 February) to try to mend relations.

In his new year address, the commission president lashed out at Renzi, accusing him of "vilifying and criticising the commission on every street corner”.

In December, Renzi said that "Europe has to serve all 28 countries, not just one”, aiming at the commission president whom he considers too close to German chancellor Angela Merkel.

"The European project is suffering an unparalleled crisis," the Italian government memo says.

"The policy reaction to the economic recession and large unemployment is often perceived as insufficient by European citizens, which often struggle to perceive the added value of being part of the Union," it says.

Analysis

Renzi plots EU collision course

Italy's prime minister Matteo Renzi has stepped up his fiery anti-EU rhetoric. This may boost his support at home, but it may eventually backfire.

Opinion

Future of Europe needs more social investment

The Rome declaration committed to a more social Europe, but the EU's economic governance model is preventing the pledges made in the Italian capital from being truly realised.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

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