The European Commission has warned Italy to reduce its national debt, in the latest foreshadowing of possible future budget battles with the incoming government in Rome.
The Commission said Italy was “currently” fulfilling its obligations under EU budget rules to try and rein in its debt, which stood at 131.8% of GDP in 2017, but that further efforts will clearly be needed.
“Our political message is very clear,” said Valdis Dombrovskis, the EU commission vice-president responsible for the euro. “Italy needs to continue to reduce its public debt which is indeed second highest in the EU after Greece.”
In turn, Pierre Moscovici, the EU’s economy commissioner, said the debt situation is an “important question” facing the Italian people and that it needs a “credible response”.
As reported by the Financial Times, Brussels and EU capitals have been rattled by the programme agreed by Italy’s far-right League and anti-establishment Five Star Movement, which couple the introduction of a flat tax with new spending promises.
Moscovici said Italy’s debt is “set to decline slightly to 130.7% in 2018 and 129.7% in 2019” based on a “no policy change” scenario.