Wednesday

17th Aug 2022

Renzi stirs up EU row ahead of eurozone meeting

  • Renzi has vowed to put an end to 'Brussels secrecy' on economic affairs (Photo: consilium.europa.eu)

Eurozone leaders are meeting on Friday (24 October) to discuss the issue of public deficits and debt, as France and Italy are in breach of the EU rules.

Ahead of the meeting, Italian Prime Minister Matteo Renzi stirred up a row with outgoing EU commission chief Jose Manuel Barroso, who criticised his decision to publish a commission letter warning him about the budget deficit.

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Renzi said he could not understand Barroso's "surprise" about the published letter, given that the Financial Times and Italian media had already "anticipated" it.

"I think it's time for total and open transparency, the time has come to put an end to secret letters in this building. With Italy there will be total clarity about anything that comes from Brussels, because we think that's the only way to help citizens understand what is going on," Renzi told journalists on the margins of an EU summit.

The Italian prime minister noted that Barroso is ending his mandate next week and said he is sure incoming EU commission chief Jean-Claude Juncker "will be aware" of the need to boost transparency in EU institutions.

"I think we will not only publish all data, but also how much they spend in these buildings [EU institutions]. We are going to have some fun," he concluded.

On his Twitter page, Renzi also wrote that "we will publish all letters and above all, all economic data of Brussels institutions."

As for the issue of Italy being in breach of the three-percent deficit rule, Renzi said this was no big problem.

"We are discussing about one-two billions difference, we can add them even this morning. For a country that gives €20bn to Europe, with a total budget of €860 billion, the two billion that in theory could be necessary are a really tiny effort," he said.

Renzi said eurozone leaders will discuss who is making the political assessment as to when there are "exceptional conditions" which allow a country to be in breach of the deficit and debt rules and when there is a "significant deviation" which triggers the commission's punitive measures.

"We have to see if these evaluations are applied equally to all countries," Renzi said.

France downplays letter

While Italy's deviation from the deficit rules may still be fixed, the bigger problem is France's budget, forecasting a deficit of 4.3 of GDP for next year, when it was supposed to reach three percent.

Speaking on his way into the EU summit, French President Francois Hollande said he is "in dialogue" with the EU commission for weeks now and that "growth remains a priority".

"France will respect the rules with a maximum of flexibility," he said.

As to France's letter - similar to the one received by his Italian colleague - Hollande said it was "banal" and not worthy of being published.

This is only the second time since the EU commission scrutinises national budgets, as part of its new increased economic coordination powers.

How it will deal with France and Italy is a litmus test for the credibility of these rules, given that countries like Spain, Portugal, Greece, Ireland and Cyprus underwent austerity measures to get their deficits under control during the eurozone crisis.

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