Brussels rejects Renzi’s call for looser fiscal policy

RICCARDO ANTIMIANI

Italian Partito Democratico (Democratic Party), or PD, chairman-designated Matteo Renzi gestures while speaking during the PD National Assembly at a hotel in Rome, Italy, 07 May 2017. The PD's national assembly with 700 delegates confirmed the former Italian Prime Minister Matteo Renzi as their chairman during the meeting.

Brussels rejects Renzi’s call for looser fiscal policy


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The European Commission rejected on Tuesday a proposal by former Italian Prime Minister and leader of the ruling PD, Matteo Renzi, that governments should be given greater leeway on public spending, Il Sole 24 reports.

Renzi’s proposal calls for Italy to be allowed to maintain a 2,9% deficit for five years, allowing for public investment to the tune of €30bn a year to regenerate growth. Under current rules, the Italian budget must aim for a 2.1% GDP deficit in 2017 and 1.2% in 2018.

Responding to Renzi’s proposal, Commissioner for Economic and Financial Affairs Pierre Moscovici argued that fiscal compact rules have already been applied with flexibility in the case of Italy and urged for continuous dialogue and engagement.

Meanwhile, the President of the Eurogroup Jeroen Dijsselbloem echoed the Commission’s view, suggesting that Italy cannot unilaterally suspend budget rules for five years. “We are in this monetary union together,” Dijsselbloem said.

Renzi responded that he respects the view of Commissioner Moscovici but said he will maintain the proposal on the table for the next Italian government in 2018, when “they {Brussels} will not be able to do anything but say yes.” By then, he suggested that Dijsselbloem is not likely to preside over the Eurogroup.

Asked to comment, Economy Minister Pier Carlo Padoan concurred that this was a discussion that will be more timely following the 2018 elections.

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