POST TIME: 14 December, 2018 00:00 00 AM
Italy’s new 2019 deficit plan still not enough: Moscovici
AFP, Paris

Italy’s new 2019 deficit plan still not enough: Moscovici

Italian PM Giuseppe Conte (L) shakes hands with EU Commission President Jean-Claude Juncker. AFP photo

A new 2019 budget plan from the Italian government to reduce its deficit to 2.04 percent of GDP is still not enough to secure EU approval, Economic Affairs Commissioner Pierre Moscovici said yesterday.

"It's a step in the right direction, but nonetheless I have to say we're still not quite there. There are still more steps to take," Moscovici told French senators in Paris after Rome's latest proposal to avoid financial penalties from Brussels.

Italian Prime Minister Giuseppe Conte made the offer Wednesday in a meeting with European Commission President Jean-Claude Juncker in Brussels.

"Technical work allowed us to obtain a margin of negotiation because we have recovered some financial resources," Conte said afterwards.

The European Commission in October rejected the big-spending budget submitted for approval by the Italian coalition government of the far-right League and the anti-establishment Five Star Movement.

It included a universal basic income of 780 euros ($890) for the least well-off to help them get back into the job market, and would have left Italy with a deficit at 2.4 percent of GDP.

Although that is below the EU-mandated limit of 3 percent, EU officials said it did not sufficiently tackle Italy's huge debt pile, which stands at 130 percent of GDP.

They also said the ambitious spending plan was based on overly optimistic economic assumptions for next year.

If an agreement is not reached, Rome could find itself the target of an EU excessive deficit procedure, which could ultimately lead to fines of up to 0.2 percent of GDP.

Many in Italy have cried foul, in particular after France signalled its deficit would breach the 3 percent limit next year because of financial relief offered in the wake of anti-government protests.

President Emmanuel Macron offered this week concessions including a minimum wage boost and tax cuts for low-income pensioners which could cost 10 to 14 billion euros.

That could send its deficit to 3.4 percent of GDP instead of the 2.8 percent as planned, Budget Minister Gerald Darmanin told senators this week. "I think it's best if this overrun be as limited as possible," Moscovici said Thursday.

"It appears the French government is working on ways to limit this, though I don't know the details... by spending cuts, which should be pursued, and perhaps new revenue," he said.

He reiterated that France and other countries are permitted under EU rules to breach the deficit threshold "as long as its limited, temporary and in exceptional circumstances."

Moscovici told AFP on Wednesday that France and Italy would not be held to different standards, insisting that "the rules are the same for everybody."