June 6, 2019 11:16 am

Disciplinary procedure looms over Italy

The European Commission has opened the way for a disciplinary procedure against Italy. According to a recent by the Commission, the Italian government has failed to take sufficient action against state debt. In the past year, the debt had risen to 132.2% of the GDP and is expected to rise even higher. Under EU rules, no country is allowed to have a budget deficit larger than 3% of gross domestic product or debt above 60% of output. The fines Italy could expect in case of a full procedure would amount to 0.2% of the GDP.

The Commission stated, that “Italy’s public debt remains a major source of vulnerability for the economy”. Acording to the report, the nations debt ratio will “rise in both 2019 and 2020, up to over 135%, due to a large debt-increasing ‘snowball’ effect, a declining primary surplus, and underachieved privatization proceeds”. The Commission added, that “while refinancing risks remain limited in the short term, the high public debt remains a source of vulnerability for Italy’s economy”. Bloomberg

 

This post was written by Jens Secker

(Image rights: istockphoto.com/A-Basler)

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