Brussels/Rome, 04/07/2014 (Agence Europe) - On Friday 4 July, Italy and Germany tried to calm things down, after a week-long clash over the interpretation of the European budgetary rules.
“There is no row with Germany” and “our problem is not Germany, but Italy”, which needs to be capable of reform, said Italian Prime Minister Matteo Renzi after the meeting in Rome between the Italian government and the European Commission to kick off the Italian Presidency of the Council of the EU. “There are no differences of opinion over the stability and growth pact”, the spokesperson to the German chancellor, Angela Merkel, said in Berlin.
In late June, the European Council stated that policies promoting economic growth should carry the same weight as policies to guarantee budgetary stability (see EUROPE 11110). It therefore called for “better use of the flexibility included in the current stability pact”.
“In Europe we have a stability AND growth pact”, reiterated Renzi, adding that “it is not Italy which is calling for more flexibility”, as this is useful for the whole of Europe. It is now up to our country to continue with the structural reforms, he stressed. To this end, the Italian authorities are now promoting a full agenda of reforms to take “1000 days”, starting in September.
Despite attempts to douse the flames of the nascent row, which the Italian press has incidentally done a great deal to fan, the young Italian prime minister could not help reacting to the recent comments of Bundesbank boss Jens Weidmann, who said that indebtedness cannot be a driving force for growth. “Europe does not belong to the bankers, but to the citizens”, he said, calling on the BuBa not to interfere in Italian political debate. The German chancellor's spokesperson responded to this by stressing that the German Central Bank is independent.
The president of the European Commission, José Manuel Durão Barroso, described it as a debate which is “sometimes overblown”. At the European summit, “no prime minister called for changes to the rules”, which must therefore be respected “100%”, he said. He argued in favour of an “intelligent” way to apply the rules of the stability and growth pact, saying that it was a “mistake to be obsessed by budgetary consolidation”. “If a country delivers seriously on reforms, there will be more flexibility in applying the rules”, he stressed, welcoming the “1000 days” agenda set out by the Italian government. He said that Italy needs to reinforce competitiveness. “In order to do this, we need budgetary rigour, but also investment. Otherwise, there will be no growth and if there is no growth, there will be no jobs”, he added.
Barroso also reiterated that, with the most recent revision of the Pact (“2-pack” and “6-pack” legislative packages), the Commission is already using the flexibility introduced, for instance by putting more emphasis on the structural deficit in order to take account of the economic cycle. This is why extra time has been given to meet the objectives set, from which “Spain, France, Greece, Ireland and Portugal” have benefited, he concluded. (MB and CG)