The European Finance Ministers support the European Commission's approach to the opening of a debt-based excessive deficit procedure against Italy, while recognising that the dialogue with the Italian authorities is moving in the desired direction.
"The case of Italy deserved special attention, since the Commission identified a particularly serious non-compliance in the Italian budget plan for 2019." said Eurogroup President Mário Centeno on Tuesday 4 December at the end of the meeting (see EUROPE 12142). "Sound public finances are a precondition for sustainable growth," he added.
In its statement, the Eurogroup "supports the Commission assessment and recommend Italy to take the necessary measures" to comply with European budgetary rules. The current favourable economic conditions require an "urgent" restoration of the fiscal margin, and a "slow" reduction of excessive public debt remains "a matter for concern that should be decisively addressed." he added, describing as "worrying" the limited fiscal expansion or structural fiscal adjustment (excluding cyclical effects) advocated by some euro area countries for 2019.
With this reminder of the rules, the Commissioner for Economic and Monetary Affairs, Pierre Moscovici, welcomed the "different tone" that the Italian authorities are now using in their exchanges with the European level. "Italy is listening and trying to find solutions," he said, welcoming a dialogue that has really started "on method and substance”.
It remains to be seen, however, how far the Italian authorities will be prepared to reduce the structural public deficit, stressed Mr Moscovici, for whom the Commission's task is not to challenge this or that measure, but to ensure that the draft Italian budget is compatible with the Pact.
"Concrete actions are needed and we are evaluating all options," said Italian Finance Minister Giovanni Tria. He did not wish to go into the details of the government's reflections until political deals had been made, but he rejected the hypothesis of calling into question the introduction of citizenship income or pension reform.
In addition to the Italian case, ministers discussed the draft budgets of the other 2019 euro area countries, while, for the first time since the introduction of the euro, no budget of the Nineteen will have a deficit in 2018 exceeding 3% of national GDP.
The Eurogroup supports all the Commission's positions (see EUROPE 12142). The draft budgets of five countries - Belgium, Spain, France, Portugal, Slovenia - risk not complying with the Stability Pact, in particular the debt reduction criterion, except Slovenia.
Estonia, Latvia and Slovakia generally comply with European budgetary rules, while ten other countries - Austria, Cyprus, Finland, Germany, Greece, Ireland, Lithuania, Luxembourg, Malta and the Netherlands - fully comply with the Pact.
And the Eurogroup welcomes the fact that some countries that have exceeded their medium-term budgetary objectives wish to use part of this margin to stimulate growth and investment. (Original version in French by Mathieu Bion)