Brussels issued a stern warning to Italy and eight other countries, including Germany, regarding the 2024 Budget, stating it is “not fully in line” with the recommendations of the EU Council. The European Commission urges Italy to “be ready” to take necessary measures, highlighting concerns about public spending and the spending cap.
Budget: Macro Economic Imbalance
According to the European executive, Italy is once again in macroeconomic imbalance and must conduct in-depth reviews with 11 other countries, including Germany. Paolo Gentiloni, EU Commissioner for Economy, emphasizes it’s not a rejection but an “invitation to prudence and the use of European common resources.”
Italian Government Reactions
Minister of Economy Giancarlo Giorgetti accepts the Commission’s judgment with “healthy realism.” Despite the negative impact of energy and Superbonus, the Italian government commits to moving forward with caution and realism.
Elimination of Energy Supports
The European Commission notes that the savings from the gradual elimination of energy supports will not be fully realized to reduce the public deficit. This risk of not being in line with Council recommendations further puts Italy under observation.
Spending Increase Target
While Italy nominally meets the target of a net increase of 1.3% in public spending, the Commission highlights that the real increase has been much greater than it appears. The basis of spring economic forecasts has led to a distorted assessment of compliance with the recommended limit.
The Italian government’s decision to reclassify Superbonus tax credits has led to a substantial increase in primary public spending. The Commission calculates that with real 2023 data, Italy would have exceeded the 0.6% GDP limit for 2024, despite the expected reduction in Superbonus tax credits in 2024.
Budget 2024: Commission’s Conclusion
The Commission emphasizes that the national net primary public spending is assessed as not fully in line with the recommendation. It urges Italy to ensure that fiscal policy in 2024 aligns with recommendations, suggesting the adoption of necessary measures.
Paolo Gentiloni emphasizes that it is an “invitation to budgetary prudence and an invitation to make the best use of common European resources.” He underscores the constructive nature of the relationship between the EU and Italy.
Budget 2024: conclusions
Italy, along with eight other countries, has been warned by the EU for the 2024 Budget not complying with the spending cap. Concerns revolve around public spending and the ineffective elimination of energy supports. The Italian government is called upon to take necessary measures to align fiscal policy with the EU Council, maintaining a cautious approach in the use of resources.