The European Commission acknowledges Italy's progress in many fields and invites it to keep debt under control
Rome, February 22, 2017 – As part of its economic surveillance over Member Countries, the European Commission published a number of documents today (colloquially known as the "European semester” and in this particular case the "winter package"):
- One report for each of the 27 Member States (a separate Stability programme is envisaged for Greece), including an in-depth review for 13 countries.
- One Communication on the main conclusions of the report to be submitted to the European Parliament, the Council, the European Central Bank, and the Eurogroup.
- A report on the adoption of the Fiscal Compact in the national legislation of Member States.
- A report on public debt in Italy.
- A report proposing a fine on Austria for statistical misrepresentation.
In the Country Report - Italy, the Commission highlights two problems: the high number of non-performing loans, which are expected to decrease only as from 2016; and differences between regions on the regulation of the so-called “collaborative economy”, whose development the Commission deems crucial to promote the growth of competitiveness.
The list of sectors in which the Commission reports significant improvements is much longer: the labour market, education, bureaucratic and administrative simplification, the legal system, the budgetary process, and tools for managing non-performing loans – including through the improvement of procedures for the management of insolvency and for the recovery of claims. Additionally, Italy is cited as an example of best practices regarding the law on start-ups and the Industry 4.0 strategy.
In its report on the debt situation, the Commission acknowledges the presence of factors that justify current trends in the debt-to-GDP ratio, which has stabilized but has not yet reversed the trends of recent years. The Committee also feels that certain expenses are due to exceptional circumstances, such as earthquakes and unprecedented inflows of refugees. It therefore deems that an additional structural effort of 0.2% of GDP would be sufficient to meet debt reduction targets. Without the exceptional events reported by the Government (Italian Version) to the Commission, the debt-to-GDP ratio would have already begun to fall. And had the Commission not acknowledged the legitimacy of Italy’s arguments, the need for cost adjustments would have been at least three times higher.
The Commission expects Italy to adopt adjustment measures early enough so that they may be taken into account for its spring economic forecast (expected for May), and should it fail to do so an infringement procedure against Italy would be very likely.
During the press conference to introduce the reports, the Vice-President of the Commission Mr. Valdis Dombrovskis and Commissioner Pierre Moscovici acknowledged Italy’s efforts in addressing its multiple needs for reform, and stated that the degree of implementation of the Commission’s recommendations is in keeping with expectations and higher than the European average. They also pointed out that the effects of reforms take time to fully materialise, although there is already an improvement in the job market (increase in the number of employed people and reduced dualism between those with guaranteed contracts and those without), and the resumption of growth in the economy as a whole.