EC revises Italy deficit up to 2.9%

Budget spending will bloat debt says Commission

(ANSA) - Brussels, November 8 - The European Commission on Thursday revised its forecasts for Italy's budget deficit to 2.9% of GDP in 2019 and 3.1% in 2020.
    This was because, it said, of expensive measures in the 2019 budget including a basic income, reform of the Fornero pension reform, and public investments, all of which, the EC said, "will significantly increase spending".
    The EC said the figures do not take into account the so-called safeguard clauses, that is a VAT hike, given its "systematic sterilisation" by successive governments.
    The Commission said in its autumn forecasts that Italy's public debt would "remain stable around 131% (of GDP) throughout all the period of the forecasts, that is from 2018 to 2020.
    This was due, it said, to the "deterioration of the deficit, united with the risks of lower growth".
    European Commission Vice President for the Euro Valdis Dombrovskis said "uncertainty and risks, both internal and external, are on the rise and are beginning to weigh on the pace of economic activity".
    Italy's planned efforts to boost growth could "prove to be less effective" than hoped, the EC said.
    The Commission said they could have "a lower impact on growth".
    As well, it said, a higher spread could pose risks to Italian banks.
    photo: Dombrovskis (R) with Economic Affairs Commissioner Pierre Moscovici