Italy wants France and Spain to support its campaign to change the EU’s fiscal rules and focus them more on growth in the face of a regional and global economic slowdown, Economy Minister Giovanni Tria said in an interview.
Italy’s ruling coalition, forged a year ago by the anti-establishment 5 Star Movement and the right-wing League, has always voiced criticism against the so-called EU Fiscal Compact treaty which in 2013 introduced stricter budget rules.
League leader and deputy prime minister Matteo Salvini blames them for impoverishing the country by forcing it to adopt austerity when more expansive fiscal policy is required.
Italy has the eurozone’s second-biggest debt burden after Greece, at more than 130% of GDP, and has twice in six months narrowly avoided EU disciplinary action after pursuing budget stimulus, including major new welfare measures.
In an interview with Italian daily La Stampa, Mr Tria said EU states should review their priorities and denied that Italy was isolated in its push for a revision of the rules. France has not shown much public enthusiasm for Italy’s cause.
However, Paris has meanwhile embarked on its own new budget spending and tax cuts, unveiling last year a package worth more than €10bn in response to prolonged street protests.
“Italy is certainly standing next to France and Spain and partially to Germany. There are the prerequisites for changing EU economic policies,” said Mr Tria, who is considered a moderate voice inside the government.
“Relaunching a debate over the Fiscal Compact is possible,” he said. “We need to discuss how to change these rules,” he added.
Meanwhile, Bank of Italy governor Ignazio Visco also renewed his call for a review of European rules on banking crises that limit the ability to help ailing lenders.
The central banker focused his criticism on EU rules curbing state intervention that distorts competition. At least 10 Italian banks have required some sort of financial aid from taxpayers or industry peers over the last three years.
In 2017, the Italian government committed as much as €17bn to wind down Banca Popolare di Vicenza and Veneto Banca and won approval to provide €5.4bn for the recapitalisation of Banca Monte dei Paschi di Siena.
Banca Carige is the latest lender facing possible state intervention as it struggles to find a market solution.
- Reuters and Bloomberg