EU warns Italy on wasteful spending and credible budget

ROME – Italy needs to cut wasteful spending and focus on investment and infrastructure spending that will help promote growth said European Commissioner for Economic Affairs Pierre Moscovici on Thursday.

 “It’s in Italy’s interest to reduce its very high public debt,” Moscovici said when asked to comment about the Conte premiership at the European Commission event held in Paris.

 “It would be a lie to think one can invest with a higher deficit. The Italian budget needs to be credible, at nominal level, but also credible in terms of the structural reforms that are required,” he said.

 Italy is in preparation for its 2019 budget. This process is creating tensions between the League-Five Star coalition government and Brussels authorities. The Italian government wants to deliver on campaign promises such as the Five Star flagship policy of basic income and the League’s flat tax. European Union authorities are warning the Italian government on potential risks of not complying with the Union’s deficit and debt rules.

 “I won’t give in on basic income. Tria [Italy’s finance minister] needs to listen to us. With no basic income Italy will incur many problems,” Minister for the South Barbara Lezzi said.

 “There are no divisions with Giovanni Tria. We are working together to find necessary solutions to implement the flat tax, basic income and abolish the Fornero pensions reform,” Deputy Prime Minister Luigi Di Maio said.

 Giovanni Tria is taking a cautious approach to increasing government spending via borrowing.

 “We are requesting the EU’s authorization for investment in infrastructure. We understand the rules on budget deficits and debt but are asking for more flexibility for investment spending,” Lezzi said.

Moscovici added that he was working closely with Italy’s finance minister Tria, describing it as a “constructive climate”.