EU Commission says Italy is 'too optimistic' financially

Pierre Moscovici, commissioner sympathetic with Italy

 ROME -- The European Commission warns Italy about being “too optimistic” as Brussels reviews Italy’s growth estimates in light of the uncertainties caused by the December referendum, government sources said Thursday.

 Between the lines of the documents in which the European Commission has presented their economic reviews, there are three very clear messages for Italy, La Stampa writes Thursday. The first is that the Italian government’s estimates relative to growth, deficit and debts are too optimistic. Brussels’ estimates instead draw out a different scenario, with an immediate slight worsening then a negative trend for the future.

 “The great faith in an upwards movement, with the extraction of a one-time budget to finance the expansionist measures drawn out by the 2017 budget plan, contribute to the marked worsening of the structural balance in 2016 and 2017,” reads the first judgement of the financial measures in the document.

 The Commission recognizes that the accounts could worsen further due to “political uncertainty, especially due to the Dec. 4 referendum.” According to La Stampa, Brussels’ message to Renzi is more or less that the victory of the No campaign could spark political instability and thus negative effects on the economy -- a scenario that the EU wants to avoid.

 Brussels will continue to put pressure on Italy to convince Renzi to correct some measures, and few predict that this will fail. The commissioner for the Euro Valdis Dombrovskis tweeted that “with the growing global uncertainty it is increasingly more important to pursue more prudent politics.”

 Commissioner Pierre Moscovici said in reply to this that “Juncker has said that a positive budget orientation is needed, not one that promotes austerity, but one that sparks growth.” The French commissioner is the one working together on the deal with Pier Carlo Padoan, Italian Minister of Economy.

 Moscovici seems open to earthquake and migration flexibility, saying that “this Commission understands Italy’s social and political problems and accompanies the reform effort,” promising to take into account in an equal and proportionate manner” the expenditure that Renzi’s government must undertake for the migrant and earthquake problems, Il Messaggero reports.

 The expenditures for migrants are costs that Italy has to keep up “also for other European countries,” explained Moscovici. On the topic of the earthquake, the commissioner said that “these are investments to prevent and alleviate earthquake problems.” These comments were taken as openness towards the Italian government’s request to extinguish 0.4 percent of GDP.