EU says no easing of fiscal pressure on Italy

The European Commission warned yesterday there would be no easing of pressure on Italy to adhere to fiscal targets as it prepared to form its fourth government in two years.

Speaking following yesterday's eurogroup meeting in Brussels, EU economics commissioner Olli Rehn defended the European Commission's targets for Italy, denying they prohibited growth.

“We all know that Italy has a very high level of public debt. Piling new debt on to this old debt does not seek to improve competitive of the Italian economy. It is in the interest of Italy to stabilise the level of public debt and, at some point, start to reduce it.”

With the commission due to publish its quarterly economic forecasts for each member state today, Mr Rehn was due to hold bilateral talks last night on the fringes of the eurogroup meeting with Italian finance minister Fabrizio Saccomanni.

Under

pressure
Italy has been under

pressure to meet fiscal targets set by Brussels. While Italy last week registered its first growth in GDP in three years, its debt to GDP ratio is one of the highest in the euro zone at 127 per cent.

As the euro zone's third largest economy began the process of forming a new government, with the mayor of Florence, Matteo Renzi (39), set to become prime minister, Mr Rehn stressed the need for Italy to continue implementing reforms. "I'm confident the new government will aim at tackling economic competitiveness and the high level of public debt."

Meanwhile, Jeroen Dijsselbloem, head of the group of euro zone finance ministers, confirmed that a decision on a possible third bailout for Greece had been pushed back until the second half of this year. It follows weekend reports in Germany that Berlin is anxious to avoid committing to fresh funds for Greece before May's European elections.

“The Greek programme runs until the end of the year. There is no urgent reason to discuss the future or any follow-up to the programme before the second half of this year,” Mr Dijsellbloem said.

Following an update from the Greek finance minister at yesterday’s eurogroup, the finance ministers confirmed the troika mission would return to Athens before the end of this week. The latest review to Greece has been halted many times since September amid disagreements over the scale of cuts needed in Athens.