Sunday

21st Jan 2018

Brussels calls on Italy to cut deficit by 2007

The European Commission on Wednesday (29 June) formally asked the Italian government to take measures to get back in line with eurozone rules.

Rome was called on to push its public spending deficit under the three percent of GDP ceiling by the end of 2007, and present a plan to Brussels by November on how it will achieve it.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

According to the commission's data, Italy's deficit stood at 3.2 percent of GDP in the two preceding years, and it is projected to reach 3.6 percent this year and 4.6 percent of GDP in 2006.

Silvio Berlusconi's government has also been asked to cut down its long-term public debt that currently stands at 106 percent of GDP - the second biggest after Greece - compared to the 60 percent eurozone limit.

The timetable proposed by the commission makes it possible for Mr Berlusconi to avoid unpopular spending cuts before next year's general elections, although "at least half of the correction should take place by 2006".

Finance ministers are expected to hammer out final details of the commission's proposal at a meeting on 12 July.

Monetary affairs commissioner Joaquin Almunia admitted the whole procedure was going to be an "important test" of the new stability and growth pact as Italy is first key case evaluated under the rules as revised in March.

"We are all interested in increasing fiscal discipline, particularly in the moments we are living," he said, pointing to the political crisis in Europe due to the failed referendums on the EU constitution, as well as the gloomy economic situation in the union.

Two years instead of one

Both the old and revised eurozone rules suggest that countries with excessive deficits should get them back on track after one year, unless there are "special circumstances", recognised by the EU executive.

That has not been so in Italy's case. But Mr Almunia suggested that while "rapid correction" of its budgetary situation is necessary, 2007 is a "more appropriate deadline" because of the country's weak economy and the great structural changes needed.

The EU executive will later assess the measures proposed by the government and say if they are efficient. Rome is required to cut its structural deficit by at least 1.6 percent of GDP over 2006 and 2007.

According to the Italian economy minister Domenico Siniscalco, the commission's proposal is "balanced" and will be accompanied on the Italian side by a 2006 budget "aimed at economic growth in a framework of stability", he said in a statement.

The new four-year budgetary plan will be presented at the Italian cabinet's meeting on Friday.

Mr Berlusconi announced today that the 2006 budget will include net deficit-cutting measures worth around €10 billion, but no "mini-budget" for this year with more cuts is expected, according to wires.

Some economists are pessimistic about the effectiveness of the whole procedure.

"It's going to be mostly a lot of talk at this point, but little truly efficient action on both sides", Daniel Gross, director of the Brussels-based Centre for European Policy Studies told EUobserver.

"It will just go on the way it used to be. A country finds itself in deficit, then gets two years to repair its problem but then in some time gets it back to the same level", he said, adding he did not expect the current Italian cabinet to really change anything or implement stricter measures given its political priorities before the elections.

Italy is one of ten other EU countries with excessive deficits, joined by France, Germany, Greece, the Czech Republic, Cyprus, Hungary, Malta, Poland and Slovakia.

German coalition deal aims for 'Macron-lite' EU renewal

Merkel and Schulz clear the first hurdle of coalition talks, but the SPD's full membership backing is still needed. The likely coalition parties express support for Macron's eurozone reform ideas, but remain cautious.

Uber is a transport service, EU court rules

Ruling means that national governments have the right to demand that Uber drivers request the same permits and authorisations required of taxi drivers.

News in Brief

  1. Germany confirms attendance at air quality summit
  2. Nearly half of 'fixed' Dieselgate cars show problems
  3. YouTube, Twitter, Facebook up hate speech deletion
  4. UK mulls bridge to France
  5. German far-right float anti-asylum bill
  6. EU Parliament to investigate glyphosate-decision process
  7. 'Mutagenesis' falls outside EU's GMO rules, says EU top lawyer
  8. Decision on Polish MEP's Nazi-era slur postponed

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Solutions for Sustainable Cities: New Grants Awarded for Branding Projects
  2. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  3. Nordic Council of MinistersOresund Inspires Other EU Border Regions to Work Together to Generate Growth
  4. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  5. AJC Transatlantic InstituteAJC Calls on EU to Sanction Iran’s Revolutionary Guards, Expel Ambassadors
  6. Dialogue PlatformRoundtable on "Political Islam, Civil Islam and The West" 31 January
  7. ILGA EuropeFreedom of Movement and Same-Sex Couples in Romania – Case Update!
  8. EU2017EEEstonia Completes First EU Presidency, Introduced New Topics to the Agenda
  9. Bio-Based IndustriesLeading the Transition Towards a Post-Petroleum Society
  10. ACCAWelcomes the Start of the New Bulgarian Presidency
  11. Mission of China to the EUPremier Li and President Tusk Stress Importance of Ties at ASEM Summit
  12. EU2017EEVAT on Electronic Commerce: New Rules Adopted

Latest News

  1. Middle East, Messi and missing MEPs on the agenda This WEEK
  2. Instagram and Google Plus join EU anti-hate speech drive
  3. EU wants 'entrepreneurship' in education systems
  4. UK loses EU satellite centre to Spain
  5. Pay into EU budget for market access, Macron tells May
  6. Ethiopian regime to get EU migrants' names
  7. EU to lend Greece up to €7bn more next week
  8. Nato prepares to take in Macedonia

Stakeholders' Highlights

  1. European Jewish CongressChair of EU Parliament Working Group on Antisemitism Condemns Wave of Attacks
  2. Counter BalanceA New Study Challenges the Infrastructure Mega Corridors Agenda
  3. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  4. Plastics Recyclers Europe65% Plastics Recycling Rate Attainable by 2025 New Study Shows
  5. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  6. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  7. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  8. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  9. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  10. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  11. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  12. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap