Moscovici says up to Italy on pensions

(ANSA) - Rome, May 5 - 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".