ZCZC
BCN-17
EU-EUROZONE-ECONOMY-ITALY
Rome says Brussels ‘failed’ with Italy economy forecast
MILAN, Nov 9, 2018 (BSS/AFP) – Italy’s finance minister on Thursday
rejected a European Commission forecast that its deficit would balloon thanks
to its big-spending budget as a “technical failure”.
“We regret to note the Commission’s technical failure,” Giovanni Tria said
in a statement, slamming “an inadequate and partial analysis” of the populist
government’s proposed 2019 budget.
According to Brussels, Italy’s deficit will reach 2.9 percent of its gross
domestic product next year, much bigger than the 1.7 percent in its previous
forecast.
“The fact remains that the Italian parliament has authorised a maximum
deficit of 2.4% for 2019 that the government, therefore, is committed to
respecting,” Tria said.
Crucially, the EU believes Italy will grow by a mere 1.2 percent in 2019
while Rome’s 2019 budget is based on an estimate of annual growth of 1.5
percent.
Brussels last month took the unprecedented step of rejecting the budget of
coalition partners the far-right League and the anti-establishment Five Star
Movement.
In its Thursday forecast, the Commission said it believed that continued
overspending means Italy’s massive debt will remain unchanged at around 131
percent of GDP over the next two years.
But Prime Minister Giuseppe Conte insisted that Italy’s debt would be
reduced to 130 percent of GDP next year and to 126.7 percent in 2021.
The Commission “underestimates the positive impact of our budget and our
structural reforms,” Conte said in a statement.
“Let’s move forward with our estimates… there are no grounds for
questioning the validity and sustainability of our forecasts,” Conte said.
Any other scenario is “absolutely unlikely” said Conte.
Italian leaders insist a high debt and low growth rate are all the more
reason to kickstart the economy through a spending spree.
The Italian government said that while the Commission’s forecast was in
“sharp contrast” to its own, Rome still wanted “constructive dialogue”.
BSS/AFP/HR/0945