Publications
Partners
Rome - The eurozone must focus on growth and abandon an "austerity-only" approach, Italian Prime Minister Matteo Renzi said Wednesday, ahead of an EU summit where his country's budget plans could come under scrutiny.
Along with France, Italy has announced budget plans for next year that are not believed to comply with EU deficit reduction rules. Paris and Rome are seeking exceptions under ambiguous flexibility clauses.
"I think that we can no longer put off a discussion on how Europe, and especially the eurozone, can aim to break free of the tight margins of austerity-only [approaches] to adopt a [growth] strategy that today is largely missing," Renzi said.
He told parliament that he was not worried about a letter expected from the European Commission asking for clarifications on Italy's austerity-busting financial plans for 2015.
The European Union's executive has two weeks to notify those countries it deems to be in "serious non-compliance" with budget discipline rules. They can be asked to resubmit tightened budget plans. For Italy and France, that deadline would fall on October 29.
A spokesman for EU Economy Commissioner Jyrki Katainen refused to say Wednesday how many countries could be affected by this procedure.
"Technical consultations are underway with some member states," Simon O'Connor said in Brussels. "To be very clear, if we consult a member state at this point, that does not mean that there will inevitably be a negative opinion one week from now."
Italy's budget law is worth €36bn ($46bn). It includes €18bn of tax cuts, and is partly funded by an increase of the deficit from 2.2 to 2.9% of gross domestic product, just below the eurozone's limit of 3%.
It also plans to reduce Italy's structural deficit - the shortfall in the budget after the effects of recession are taken into account - by 0.1 percentage points, rather than by 0.7 percentage points as demanded by Brussels.
"We all hope that everything will be good in the Italian budget, as with all the other budgets," O'Connor said.
Every eurozone country except for bailout recipients Greece and Cyprus had to submit draft 2015 budget plans for the EU's review, under a system meant to uncover financial trouble early on.
The commission has until the end of November to issue an opinion on the cases that are not deemed to be seriously non-compliant.
Renzi said Italians should get rid of an inferiority complex towards EU institutions. He said they should no longer be perceived as "a stern and scowling professor who tells us what we should do."
The EU summit is scheduled for Thursday and Friday. Euro area leaders are due to hold a separate meeting on the second day, when the controversy over the budget plans of Italy and France could feature.
