03:35 GMT +324 May 2018
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    Italian Prime Minister Matteo Renzi speaking during a press conference at the Palazzo Chigi in Rome on June 20, 2016 after Italy's populist movement notched up spectacular gains at the municipal elections

    Italy on Course to Break EU Rules Over Gloomy Economy Forecast

    © AFP 2018 / ANDREAS SOLARO
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    Italy's economic forecast isn't looking too bright after the European Commission (EC) predicted that the southern Mediterranean country is about to break European Union rules on its budget deficit and public debt.

    The gloomy forecast comes ahead of the EC's formal opinion on Italy's 2017 draft budget predictions.

    ​Italian Prime Minister Matteo Renzi, sent the EC a draft budget which reveals broken promises to reduce its deficit and public debt.

    It seems Italy, which has suffered three earthquakes this year is on shaky economic ground.

    The southern European country has also received unprecedented levels of refugees and migrants who cross the Mediterranean with the hope they'll move on to wealthier northern European countries. 

    However, European Union rules stipulated that Italy had to process all arriving migrants on its own soil at so-called hotspots, costing the country its time and resources.

    EC President Jean-Claude Juncker, says he understands the position and predicament Italy is in.

    "When it comes to the migrant problem and the reconstruction costs after the earthquake, our place is at Italy's side, and not against it," Mr. Juncker said during a recent speech in Berlin, Germany.

    Yet the EC says that unless Rome alters its course, Italy's budget deficit, which is what the government spends compared to what it earns, will stay the same next year.

    The EC predicts Italy's gross domestic product (the total value of goods and services that the country provides) will remain 2.4 percent, perhaps even rising to 2.5 percent in 2018.

    This is despite promises and assurances from Italian Prime Minster Renzi, that it would bring its deficit shortfall down to 1.8 percent in 2017. Italy's excuse, it that economic growth is lower than expected.

    The country's structural deficit, which is the imbalance between the government's expenses and receipts, has also been rising since 2014, going against EU rules which stipulate members have to cut their structural deficit by at least 0.5 percent each year until their books are balanced.

    Italy is blaming the volume spent on migration and reconstruction following this year's earthquakes; but the Commission said the excuse was "not constructive."

    ​But for a country which has been at the receiving end of Europe's biggest migration crisis since the Second World War and which suffered two earthquakes in one year, its economic excuses are its reality.

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    Tags:
    refugee crisis, migration centers, migrant crisis, deficit, budget deficit, currency, Eurozone, European Commission, European Union, Matteo Renzi, Jean-Claude Juncker, Italy, Europe, Brussels
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