(ANSA) - Rome, September 17 - Italy, along with Belgium and France, should use the extra money derived from the lower cost of servicing the national debt thanks to reduced interest rates to cut the budget deficit, the European Central Bank said in its economic bulletin on Thursday. The bulletin noted that Belgium and Italy "face large consolidation gaps with respect to the (EU) debt rule". It added: "countries faced with high general government debt ratios (Belgium, France, Italy, Ireland and Portugal) are therefore advised to use any socalled windfall gains, i.e.
savings from lower than anticipated interest payments, for deficit reductions". Premier Matteo Renzi has promised big tax cuts in next year's budget, with the elimination of municipal service tax TASI and property tax IMU.
Economic recovery in the eurozone is expected to continue but at a slower pace than previously forecast due largely to a slowdown in emerging market economies and the consequent drop in demand for euro area exports, the European Central Bank (ECB) said in its monthly bulletin published Thursday.
Instead the bank's monetary policy measures should continue to support domestic demand, the ECB said. In this respect, the bank's governing council "emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate" and particularly the flexibility offered by its asset purchase programme - otherwise known as quantitative easing - until it sees " a sustained adjustment in the path of inflation which is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term," the bulletin read.