Saturday

4th Dec 2021

Analysis

Conte's tricky balancing act on Italian budget

  • Italian prime minister, independent Giuseppe Conte (left), has the lonely job of forcing the League and M5S to work together (Photo: quirinale.it)

The procedure against Italy for excessive debt recommended by the European Commission on Wednesday (5 June) was foreseeable, if not inevitable.

While commissioners Pierre Moscovici and Valdis Dombrovskis' press conference in Brussels was still ongoing, Italy's prime minister Giuseppe Conte, currently on an official visit to Vietnam, stated that he would do "everything to avoid an infringement procedure".

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

However, to avoid the procedure Italy needs allies in Ecofin, which brings together eurozone finance ministers.

"Unfortunately our country has not been able to forge alliances in that grouping. They would have been useful," former finance minister Pier Carlo Padoan told La Repubblica.

Before the next Ecofin meeting, scheduled for 9 July, the Italian government will have to try to persuade its European partners to allow for further negotiations with the commission about Italy's budget in order to avoid the procedure.

This was how Italy avoided the procedure in December 2018.

But the parties in government, the far-right League and the anti-establishment Five Star Movement (M5S), are also eager to fulfil some of their electoral promises, which clash with reducing Italy's sovereign debt.

In particular the League, which doubled its support at the recent European elections compared to its result in the national elections last vote, wants to replace progressive taxation with a flat tax on all forms of labour.

"The only way to reduce the debt is to cut taxes and allow Italians to work more and better," said League deputy prime minister Matteo Salvini in his first reaction to the commission's recommendation of an excessive deficit procedure.

Embezzlement woes

The main architect behind the proposal for a flat tax system, the League's Edoardo Rixi, was forced to step down last week from his position as a deputy transport minister following a conviction for embezzlement of public funds.

Salvini reacted to Rixi's resignation by appointing him as the League's infrastructure policy coordinator, while Rixi has appealed the ruling.

Another of the League's deputies at the ministry of transport and infrastructure, Armando Siri, was also recently forced to step down because of charges in a mafia-related corruption probe.

The League wants simpler rules for public procurement, arguing that big infrastructure projects, like the high-speed train line between Turin and Lyon, would re-launch the economy and create jobs.

"Debt, poverty, precariousness and unemployment have grown as a consequence of spending cuts, sanctions and austerity. We have to do the opposite," said Salvini. "We are not asking for money from the other countries. We only want to invest in work, growth, research and infrastructure."

The M5S deputy prime minister Luigi Di Maio reacted to the news from Brussels by claiming that the problem with Italy's growing sovereign debt was created before the current government took office a year ago and put the blame on his predecessors in the centre-left Democratic Party.

Di Maio seemed to ignore the fact that the commission's report includes predictions for 2019-20, based on the Italian government's intentions in terms of budgetary policy.

The M5S also have spending plans – they are proposing that public investments on health care and education be kept out of the balance books, which is currently against EU rules.

"We do take it (the possible infringement procedure) seriously, but we cannot pretend not to know that several European countries have run a much higher deficit that the treaties allow in order to re-launch their economies. And they have not had to face any sanctions," Di Maio said.

Di Maio's leadership was called into question by the M5S' results in the European elections, where their share of the vote was reduced by half compared to the national election a year ago.

But he put his position on the line with a vote on the M5S online platform and was reconfirmed by the party's members. However, according to most pundits, M5S is getting close to the point of implosion.

At an unusual press conference on Monday prime minister Giuseppe Conte, who is an independent, told the League and M5S to stop their infighting.

He and finance minister Giovanni Tria, another independent, will be responsible for negotiations with the European Commission and Ecofin. But according to Tria's predecessor, Pier Carlo Padoan, the lack of a single clear, strong political message is a serious problem.

"Europe expects one, simple thing: to speak with one Italian government only," Padoan told Repubblica. "For the time being Italy has only guaranteed a lot of confusion."

EU commission puts Italy on spot over growing debt

The EU's debt-criteria rules are in breach by Italy, the commission reiterated on Wednesday - in a decision that could pave the way for sanctions for Rome if member states agree.

Salvini triumphs in Italy

The League, Italy's far-right party, doubled its vote in European elections compared to the national elections in 2018, while the other governing party, the Five Star Movement (M5S), lost half of its voters.

Feature

Italy train row exposes competing views of EU

A planned high-speed railway connection through the Alps between Italy and France has been highly controversial for decades and is pitting governing Italian coalition parties against each other. But the European Commission insists it must go ahead.

Agenda

EU top jobs, Italy, and Western Balkans This WEEK

Talks on EP groups and top jobs in the wake of the EU election last month continue. Finance ministers also discuss whether to fine Italy, while EU commissioners promote Western Balkans enlargement.

News in Brief

  1. Covid: Belgium might close schools and cultural activities
  2. EU consumers can sue Facebook, judge advised
  3. French centre-right tilts toward Pécresse
  4. EU urged to blacklist Israeli spyware firm
  5. Austria's ex-chancellor Kurz quits politics
  6. EU agency: Omicron to be over half of infections 'within months'
  7. New German restrictions target the unvaccinated
  8. EU commission unveils proposal to digitalise justice systems

Belgian impasse leaves asylum seekers on snowy streets

Asylum seekers have been sleeping in the streets, some for weeks, in the Belgian capital Brussels - as the government grapples over the lack of capacity to accommodate them despite months of debate over the issue.

EU energy ministers clash amid gas price uncertainty

EU energy ministers met on Thursday to debate spiking gas and electricity prices, and clashed over market reform - with some countries, led by Germany, opposing actions put forward by France and others.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. Belgium tightens Covid rules as health system 'is cracking'
  2. EU and US tighten screw on Lukashenko
  3. Belgian impasse leaves asylum seekers on snowy streets
  4. EU 'missed chance' to set fossil-fuel subsidies deadline
  5. EU energy ministers clash amid gas price uncertainty
  6. ECJ told to dismiss Poland and Hungary rule-of-law challenge
  7. Covid: what Germany got right - and wrong
  8. Quick Take: Enrico Letta

Join EUobserver

Support quality EU news

Join us