European Economic Affairs
Commissioner Pierre Moscovici said Tuesday Italy's "greatest
challenge" is to fulfil its "ambitious reforms" while keeping
prudent fiscal policies and bringing down its massive public
debt.
He was speaking after the Commission revised its growth
forecasts upwards, including those for Italy, and as Premier
Matteo Renzi's executive mulled how to cover a hole in its
budget created by a court ruling on a past government's pension
measure.
The European Commission said Tuesday that Italy's gross
domestic product will increase by 0.6% this year - unchanged
from its February estimate - and rise by 1.4% in 2016, up 0.1%
on its previous estimate.
"Supported by positive external factors, the Italian
economy will return to growth in 2015 and the recovery will
strengthen in 2016," the Commission said.
The GDP forecasts suggest Italy is slowly emerging from
years of flat or negative growth and the EC also changed its
unemployment and debt forecasts in light of the improved
outlook.
The Commission predicts Italy's unemployment rate will be
12.4% this year and in 2016, having forecast in February rates
of 12.8% and 12.6% respectively.
It estimates that Italy's debt-to-GDP ratio will be 133.1%,
up from the 133% forecast in February, before shrinking to
130.6% in 2016 - rather than the 131.9% it predicted in
February.
Moscovici said that it's up to the Italian authorities to
decide what measures are needed to offset a pension shock worth
billions of euros while maintaining its European budget
commitments.
Last week, Italy's Constitutional Court ruled the national
government cannot change pension payouts as had been set out in
2011 reforms, a measure aimed at saving five billion euros.
Sources said Monday that this has triggered concerns at the
Commission level about Italy's ability to make up the revenues
without boosting debt and deficits and running afoul of EU
budget rules.
In Rome, Economy Minister Pier Carlo Padoan said that his
ministry was "working to give a positive response" to the court
ruling on pension caps.
The court rejected the caps, a decision which could cost
the government as much as five billion euros.
Padoan said that his ministry and the government are
reviewing their options in the case that involves money saving
limits imposed on certain pensions by a previous government.
"We are looking at all aspects," he said outside a
Senate hearing.
Looking across the European economy, Moscovici also that a
"real recovery" was catching hold in the Europe economy.
The Commission said it expects the eurozone's GDP to
rise by 1.5% in 2015, up 0.2 on its previous forecast, and 1.9%
in 2016.
It said the 28-State EU as a whole will do even better,
with GDP rising 1.8% and 2.1% in 2015 and 2016 respectively.
"A real cyclical recovery is now taking place in Europe,"
Moscovici said.
"Even the data confirms this".
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