The President of the European Commission, Jean-Claude Juncker, said on Tuesday 2 April he was "a little concerned to see that the Italian economy is steadily shrinking", following a meeting in Rome with Italian Prime Minister Giuseppe Conte.
Mr Juncker recalled that the Italian budget for 2019 is based on the assumption of GDP growth of 1% (see EUROPE 12163/1). "We now know that this figure must be revised downwards”, he said. He also added: "Given Italy's high public debt, all policies revolving around fiscal stimulus are limited”.
The Commission now forecasts Italian growth at 0.2% of GDP in 2019 and 0.8% in 2020 (see EUROPE 12189/1).
However, Mr Juncker hoped that the Italian authorities would make "additional efforts to keep economic growth alive".
Mr Conte had previously listed a package of measures that the Italian government has already taken or will take to stimulate growth, in particular the simplification of administrative burdens and tax incentives: the ‘construction site relaunch’ ('sblocca cantieri'), 'growth' ('crescita') and 'protect Italy' ('proteggi Italia') decrees.
Mr Conte pointed out that the Italian budget will not be modified. "Cyclical slowdown is fully acknowledged" by the Stability and Growth Pact "as a transitional phenomenon that makes it possible to maintain a structural budget deficit", he said.
The Italian Prime Minister also expressed support for fiscal capacity for the euro zone, which also has a counter-cyclical stabilisation function. (Original version in French by Mathieu Bion)