Olli Rehn believes Italy has maneuvering room in budget
European economic affairs commissioner praises progress15 October, 17:34
The Italian government has been struggling to keep its deficit at 3% of GDP in order to meet important European Union targets.
“Italy still has a little bit of maneuvering room within the 3% deficit. It’s small, but it’s there,” Rehn said at the end of the European summit of finance ministers Ecofin, held in Luxembourg.
Rehn also added that “the latest (austerity measures) go in the right direction”. Rehn’s comments contrast his stark warnings to Italy in recent weeks, in which he said Europe was keeping a sharp eye on the effects of deep cuts made to Italy’s loathed IMU property tax, which then threatened to push Italy’s deficit over the 3% limit.
Rehn was blasted by Italian centre-right lawmakers who had campaigned vigorously for the property tax cut.
However, the resulting imbalance in public finances triggered a one-percent rise in Italy’s value added tax (VAT) this month as well as a government crisis in which the centre-right threatened to scupper the governing right-left majority, but backed down at the last minute.
Rehn’s relative optimism on Tuesday also differs from findings of the International Monetary Fund and Moody’s rating agency, both of which predicted earlier this month that Italy would exceed the 3% deficit limit this year.