Brussels, 19/04/2012 (Agence Europe) - The European Commission believes that the revised economic forecasts issued by Italy will enable the country to make a substantial primary budget surplus in 2013, which could reduce its public debt by some €2 trillion. “These measures will help Italy to achieve sizeable structural surplus next year. We think it is achievable”, said a European Commission spokesperson on Thursday 19 April.
On Wednesday, Mario Monti's government announced that it had postponed for a year, from 2013 to 2014, its aim of restoring a balanced budget, due to the recession biting deeper than expected, estimated at a 1.2% shrinkage in GDP (see EUROPE 10597). The Commission spokesperson said that preliminary assessments suggest the figure was in line with the Commission's own forecasts of a 1.3% recession. The Italian government increased its public deficit forecasts to 1.7% in 2012 and 0.5% in 2013, due to the negative impact of austerity measures introduced when Monti came to power. The prime minister pointed out that the 0.5% public deficit target for 2013 complied with the fiscal compact currently being ratified by 25 member states.
Asked about the potential repercussions of Italy changing its targets while under severe scrutiny from the money markets, the Commission spokesperson pointed out that Italy's aim was to achieve a primary budget surplus, i.e. not including the cost of servicing its debt, and in fact went further than required by the stability and growth pact. The spokesperson pointed out that Italy had included the golden rule on budget restraint in its constitution as a clear commitment to be careful with public spending, adding that it was important for Italy to continue with its structural reforms in order to stimulate economic growth, the country's Achilles heel. One of the important next stages will be the long-awaited reforms of the labour market to be adopted by the Italian parliament, added the spokesperson.
Member states have until the end of this month to submit to the Commission their stability and growth programmes and details of economic reforms, as part of the European semester system. On 11 May 2012, the Commission will publish its revised growth forecasts. (MB/transl.fl)