Rome enraged with Moscovici

European Economic Affairs Commissioner Pierre Moscovici attends the forum 'The Today and Tomorrow's Competitive Strategies' organized by 'The European House - Ambrosetti' at Villa d'Este in Cernobbio, Italy, 02 September 2017. EPA-EFE/MATTEO BAZZI

Rome enraged with Moscovici


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Rome is enraged with European Economic Affairs Commissioner Pierre Moscovici.

Moscovici noted on Thursday that the rise of populism in Europe resembles the 1930s, noting however that one should not exaggerate. “Maybe there is no Hitler, perhaps little Mussolinis,” Moscovici said during a radio interview in Paris.

Rage with Moscovici

Although Moscovici did not make an explicit reference to the Italian government, the statement enraged the leaders of the governing coalition in Italy.

Deputy Prime Minister and leader of the Lega, Matteo Salvini, said Moscovici should “wash his mouth before insulting Italy.”

Salvini urged Moscovici to defend Italy’s national interests, which is his duty, and focus his criticism on France, making specific references to the pushback of migrants at Ventimiglia, the bombing campaign against Libya, and the frequent violation of EU budget rules.

Deputy Prime Minister and leader of the Five Star Movement (MS5) Luigi Di Maio said that Moscovici’s attitude is “really intolerable” and he should “not dare” to say that Italy has many little Mossolinis.

Home Front

Turning on Moscovici diverts attention from a perceived domestic dispute between the Minister of the Economy, Giovanni Tria, and the two parties. Tria is pressing for a compromise with Brussels over the 2019 budget.

That compromise does not bode well for either Luigi Di Maio or Matteo Salvini, who continue to insist on demands to roll back pension reforms, revoke a VAT tax hike, introduce a minimum income guarantee of €780 for every Italian while introducing a two-tier flat corporate tax rate (15% and 20%).

Commenting on this home front, the President of the European Central Bank Mario Draghi called on Rome to focus on “facts” rather than “words,” to de-escalate pressure on the Italian economy. From Frankfurt, he told the Italian press that “words have done some damage,” as (interest) rates have risen, for households and businesses”,” ANSA news agency reports.

Reacting on those comments too, Salvini said that he expected from “Italians in Europe” to advise rather than merely criticise.

Moscovici on Italian debt

On more than one occasion, Moscovici has said that it is in Italy’s “national interest” to reign over its surging debt-to-GDP ratio. Italy has the biggest debt in absolute numbers in Europe; Rome’s 131% debt-to-GDP ratio is second only to Greece.

As Italy is drafting its 2019 budget, pressure from Brussels is mounting for a budget that will reduce the deficit and will deescalate the debt. The new Italian government favours a more fiscally expansive strategy that will allow Italy to grow.

Meanwhile, yields on Italian bonds have risen sharply, undermining the possibility of a compromise, as Rome tries to strike a balance between fiscal consolidation, social transfers, and tax cuts. Moscovici says he is working closely with Giovanni Tria for a “credible budget.”

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