The Commission has published its latest assessment of the state of the economy of each of the countries that are part of the Eurozone single currency area, which demands that member states stay within certain fiscal rules — notably on deficits. Under the rules, member states' budget deficit must not exceed 3% of gross domestic product (GDP) and public debt must not exceed 60% of GDP.
It singled out Italy for particular admonishment, saying: "Italy is experiencing excessive imbalances. High government debt and protracted weak productivity dynamics imply risks with cross-border relevance looking forward, in a context of high non-performing loans and unemployment."
The Commission said that, unless Italy gains control of its public finances, it could face sanctions under the excessive deficit procedure — which could lead to fines being imposed on Rome.
However, the Greens-European Free Alliance (Greens/EFA) group in the European Parliament said the commission was being unduly harsh on Italy compared with a more lenient approach to Germany, which is running a "persistently high current account surplus" and is experiencing "imbalances."
"The EU Commission is using double standards. When it comes to the breaking of rules, the EU Commission treats Germany more leniently than Italy or France. While Italy is facing toughened austerity measures, the EU Commission is reluctant to start a procedure against Germany," Greens/EFA financial and economic policy spokesperson, Sven Giegold, said.
The commission report said that, in Germany — which is running a high surplus — public investment has increased in recent years, "but as a proportion of GDP still appears low compared with the euro area. Despite low interest rates that create favourable financing conditions, business investment on GDP is still subdued."
"Germany should increase its spending on investment and specifically raise low wages. This improves the living conditions in Germany, instead of pushing our partner countries further into debt. Conversely, France and Italy must intensify their economic reform efforts geared towards social and environmental sustainability," Giegold said.