Monday, December 8, 2014

The Eurogroup Italy: “We need more efforts.” Padoan: “It is not … – The Republic

The Eurogroup Italy: "We need more efforts." Padoan: "It is not … – The Republic

BRUSSELS – Italy, France and Belgium “must take additional promptly to address the ‘gap’ highlighted by the Commission and comply with the appropriate convergence towards ‘medium-term objective and the respect of the rule of debt. ” These are the conclusions of the Eurogroup ministers, who yesterday in Brussels have validated the Commission’s decision to postpone to March judgment on the three countries that are “at risk of not respecting the Stability Pact.”

Beyond the generic formula, judgment of Italy and France, however, is quite different. France, which is already for years under the excessive deficit procedure, and is likely to be penalized by a fine of very salty, must bring the current budgetary correction from 0.3 to 0.8 percent of GDP. For this the Eurogroup clearly asks Paris to take “additional measures to enable an improvement of the structural effort”. Italy, which is not under the excessive deficit procedure but is likely to enter although still far from the threat of fines, also presents a deviation between the correction launched by the government and that sought by Europe.

But between Rome and Brussels there is a divergence on the figures. The Eurogroup asks us a correction of 0.5 percent of GDP, against which the Commission estimates that the government in the Budget has made an effort of only 0.1 percent. Rome instead argues that the correction of the budget already approved is 0.3 percent, the difference would be the objective, therefore, of only 0.2 percentage points. This explains the extreme prudence used Eurogroup, which calls in Rome “effective measures that may be necessary to allow an improvement of the structural effort.”

In other words, if the predictions of the Treasury on the financial out correct, and if the measures already taken will prove even more “effective” than expected, Italy could avoid a new budgetary correction. Otherwise, however, the effort required to prevent the opening of an infringement procedure would be of the order of 0.2-0.4 GDP. While between Rome and Brussels continue consultations febrile, Commissioner for Economic Affairs Moscovici announced that in late January will reassess the situation, just before the economic forecasts in winter.

Yesterday, the Ministry of Economy commented with satisfaction the conclusions of the Eurogroup. “From the indications of the Eurogroup not clear neither the need nor the request for an additional budget package, but rather the need to accelerate the implementation of structural reforms with great determination,” said ministry spokesman. And the same Padoan confirms: “no request for additional measures: the law of stability in 2015 implemented effectively relaunch the Italian economy”. In fact Brussels has already granted Italy a discount far more substantial compared to the effort that the Stability Pact we impose on debt reduction, with a cut that would be around 2 percent. In his final statement, in fact, the Eurogroup “recognizes that the adverse economic circumstances and the very low inflation have complicated the achievement of the target of reducing debt and the full respect of the rules of debt is very demanding at this stage.”

However, Europe warns that “the high level of debt remains a cause for concern.” Yesterday also from Germany arrived much more conciliatory tone, after the interview in which Chancellor Merkel had defunct “insufficient” consolidation efforts of Italy and France. Entering the Council, the German Minister of Finance, Schauble, acknowledged the progress made by the government Renzi: “If you look at the efforts made in recent weeks, Italy has passed in Parliament a major reform of the labor market. We’re going all in the right direction and even Germany itself has to make an extra effort. “

Arguments:
Eurogroup
Stability
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