The Italian government is not
holding "secret" negotiations with the European Union over the
country's debt levels, despite the country's return to
recession, sources in the office of Premier Matteo Renzi said
Monday.
Italy will heed its obligations on meeting deficit and debt
levels as set out by the EU without increased taxes, the sources
added.
La Repubblica newspaper on Monday reported that Renzi was
talking with the EU about finding "flexibility" on Italy's debt
and deficit as part of a "grand bargain" with Brussels.
The comments came amid new data suggesting Italians are
struggling to make ends meet, including a record number seeking
approval to pay taxes in installments.
Equalitalia, the national tax collection agency, said
Monday that 156,000 new requests were made in July for such
permission - a new record that consumer groups said fits with
other data showing the struggle facing Italians as the country
slides back into recession.
Equalitalia also noted that 2.4 million accounts with a
total value of 26.6 billion euros are now on active installment
payment plans for their taxes, about two-thirds of those
individuals and the rest companies.
Recent data showed the Italian economy returned to
recession in the first half of this year, its third in five
years, which has raised concerns about the ability of the Renzi
government to meet its budget obligations.
Those include a requirement by the European Union that
member states maintain a ratio of deficits to gross domestic
product (GDP) of under 3%.
Renzi has insisted that Italy will not break the EU limits,
even though his government's budget calculations have been hit
by the economic slide back into recession.
Indeed, Renzi has said Italy's deficit-to-GDP ratio for
2014 will be 2.9%, above the government's target of 2.6% but
below the 3% threshold allowed by the EU.
Economic problems are not unique to Italy but have hit many
parts of Europe, said Renzi's office.
That was demonstrated last Thursday by data which showed
that eurozone growth was flat in the second quarter.
In fact, Germany's gross domestic product (GDP) actually
fell 0.2% in the second quarter compared with the first three
months of the year, while France's economy was stagnant.
Renzi said at the time that those European economic figures
vindicated his campaign for the EU to focus more on promoting
growth and job creation after years of painful austerity.
However, it is inevitable that growth in the Italian
economy will be "well below" the 0.8% previously forecast by the
government for 2014, said Economy Minister Pier Carlo Padoan.
In an interview broadcast in English on BBC radio, Padoan
would not say what the government's new estimate will be for GDP
growth, since the previous forecast of 0.8% growth is now out of
date.
He also defended the Renzi government's reforms put in
place since the Democratic Party (PD) leader took power in
February.
Padoan urged patience in allowing time for the reforms,
including tax breaks such as an 80-euro monthly bonus for
low-income Italians, to kick in.
Weak GDP "is long-term problem and it will take two years
to see the effect" of reforms, Padoan said in the Sunday
interview on BBC.
But Italian families and the economy need help very
quickly, with policies that will leave more cash in household
wallets for spending that will, in turn, boost the economy, said
consumer groups Federconsumi and Adusbef.
"It is urgent and necessary that the government shows a
serious and dedicated commitment to escaping from this
situation, by giving the highest priority to recovery of market
demand to restart the entire economic system," the consumer
groups said.
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