Italy’s European Affairs Minister Paolo Savona has proposed that Italy invest €50 billion, or 2,7% of its GDP, into its debt crisis by stimulating growth rather than fiscal consolidation measures.
Savona, firebrand Eurosceptic is a former industry minister who served in the short-lived technocratic government of Carlo Azeglio Ciampi over two decades ago, was at the heart of a crisis that saw Italian bond yields surge and the formation of a government nearly derailed. The
He is a known as an open critic of the Single Currency and once criticised Germany for using Greece as a proving ground to demonstrate that Berlin is the dominating power in Europe. Savona famously likened the Eurozone to a German prison and called the Single Currency a historic mistake. That interview was later posted on social media platforms by the 5-Star Movement leader, Beppe Grillo, who led a campaign against Italy’s “international subjugation.”
Savona’s proposed appointment as economy minister was vetoed by Italian President Sergio Matterella. In order for the President to consent to the formation of a government, the leader of the 5- Star Movement offered a compromise, giving Savona his current “European Affairs” portfolio.
In an interview with daily La Verita, Savona said Italy should be allowed to spend the equivalent of this year’s estimated current account surplus to stimulate growth. His proposal has the backing of the entire cabinet, including economy minister Giovanni Tria, Savona underscored.
Savona also called for the European Central Bank to act as a lender of last resort for the EU Member States, rather than relying on a European Monetary Fund. Those who oppose this view, Savona argues, “don’t want a united Europe.”
The new Italian government is expected to submit its first 2019 budget in October with both Economic Affairs Commissioner, Pierre Moscovici, and the President of the ECB, Mario Draghi, having expressed reservations about Italy’s economic programme.
Italy is apparently planning a fiscally expansive budget, with an increase in welfare spending and a lower minimum age of retirement.