Connect to share and comment

EU expects Italy 'to honour' economic commitments

PlacardEnlarge
(Globalpost/GlobalPost)

The EU's executive Tuesday said it had heard "the message of concern" sent by dissatisfied Italian voters but expected the country nevertheless to stick to its pledges of budget cuts and economic reforms.

"We clearly hear the message of concern expressed by Italian citizens," said European Commission spokesman Olivier Bailly at a news conference.

But "Italy has made commitments vis a vis the Commission and other member states, on the reduction of its deficit, on the reduction of its debt, and on a number of other pledges of structural reform.

"As far as we are concerned these commitments remain, they are Italy's commitments and the Commission expects Italy to honour its commitments."

His comments came in response to questions over the impact of EU-agreed economic austerity policies on the outcome of the Italian election.

In a prepared statement read out by Bailly, the EU executive said: "Italy remains a great founder nation of the European Union.

"The Commission has full confidence in Italian democracy and the Commission will work closely with the future government towards the relaunch of growth and job creations in Italy."

Speaking during a visit to Lithuania on Tuesday, EU president Herman Van Rompuy expressed confidence Italy would remain a stable country in the eurozone and urged its new leaders to move further on fiscal consolidation and reforms.

While respecting the will of voters, "there is sufficient potential by the leaders to compromise and to continue the work of the last year... the course to follow is clear," he said.

Italy's struggling economy and rising unemployment were the key issues in the polls which failed to produce a clear winner and saw a massive vote for a new populist anti-austerity party which came a close third to centre-left Democratic Party leader Pier Luigi Bersani and former premier Silvio Berlusconi on the right.

The big loser was outgoing prime minister Mario Monti, who was drafted in to run a technocratic government in the debt-strapped country after Berlusconi was ousted at the height of the financial crisis in 2011.

The Italian economy has been in the doldrums for several years and is expected to shrink 1.0 percent this year after 2.2 percent in 2012, according to the latest EU forecasts.

The public deficit -- the shortfall between government revenues and spending -- is put at 2.1 percent of GDP for 2013, improving from 2.9 percent last year.

That is within the EU ceiling of 3.0 percent of GDP but the total accumulated debt is forecast at 128.1 percent this year, only marginally lower than 127.1 for 2012 and more than double the EU limit of 60 percent.

Stressing repeatedly the EU's support for Italy's reform efforts, Bailly said "the current debt burden undermines economic growth" and it was essential that the country press ahead with its commitments to reduce it.

The EU had never promised the reforms would produce quick results but they were beginning to have a positive impact, especially on the economy's competitive standing, Bailly said.

Putting the changes off now, would only mean more pain and greater austerity later, he said, adding: "What if we had not done anything … what would be the size of the bill ... in five year's time?"

burs/frj/rl

http://www.globalpost.com/dispatch/news/afp/130226/eu-expects-italy-honour-economic-commitments-0