ECB: Italy in crisis worse than expected. A risk the deficit / GDP ratio to 2.6% – Il Sole 24 Ore

ECB: Italy in crisis worse than expected. A risk the deficit / GDP ratio to 2.6% – Il Sole 24 Ore

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This article was published on 11 September 2014 at 10:42.
The last change is the 11 September 2014 at 10:50.

At the risk the goal of the Italian Government on the public accounts for 2014, writes the Bank European Central in the monthly bulletin, in an analysis of the budgets of euro area countries.
According to the ECB, the risk of failure to achieve the target (a deficit equal to 2.6% of gross domestic product) derived from ‘evolution of the economy, which is going worse than expected. The ECB therefore urges the Government to “further strengthen” fiscal policy in order to ensure compliance with the Stability and Growth Pact, in particular as regards the reduction of the debt / GDP ratio.

The theme of fiscal policy has recently been at the center of dibatito Europe, with Italy and France (which has just announced that it will return the reduction of the deficit to 3% in 2017) who are pushing for an easing of austerity and Germany on the other side. On the issue has intervened recently also the president of the ECB, Mario Draghi, arguing that, while complying with the current rules, can be used all the flexibility that existing and countries that have room for maneuver (an implicit reference to Germany) may use leverage budget to stimulate the economy.

The Eurotower monthly bulletin notes that in the first six months of 2014, the German budget recorded a surplus of 0.6% of GDP, and it is this, it is the government’s objectives for this and the next few years , go beyond what is laid down in the Constitutional Law on the “brake” on the public debt, both in the Europe Agreements. Similar pressures on these days in Berlin have come from the director of the IMF, Christine Lagarde, but have already been rejected by the German government.

The question, along with proposals for the revival of investment in the euro area, will be discussed at the Eurogroup and Ecofin meetings scheduled this Friday and Saturday in Milan, under the Italian Presidency.

The Monthly Bulletin of the ECB notes that in the first three months of the year the Italian deficit has an improvement compared to the same period of 2013 (1.8% of GDP to 1.6), due to lower public spending mainly for investment, while revenues have remained more or less constant. In the first half, there was a slight decrease (0.1% of GDP) in tax revenue, but this, says the ECB is due to a different timing of tax payments compared to last year.

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