The EU Stability Pact will also remain suspended for 2023. This was announced today, Monday 23 May, by the European Commission. At the basis of Brussels' decision are "the increased uncertainty and the strong downside risks for the economic prospects in the context of the war in Ukraine", but also the unprecedented increases in energy prices and "the continuous disruption of the supply chain ” which “justify the extension of the general safeguard clause” which suspends the obligations of the Pact “in 2023”. This is what we read in spring recommendations of the European Semester. The clause will be deactivated "starting from 2024".
EU, Stability Pact suspended. Dombrovskis: "It's not a free-for-all"
However, the vice president of the EU Commission Valdis Dombrovskis underlined that the extension of the suspension of the Stability Pact "does not mean suspending the rules and does not mean a free all”.
Brussels has in fact invited the Member States to pursue a “prudent” policy, announcing new assessments on the trend of public finances in the autumn of 2022 and then in the spring of 2023.
Dombrovskis also stated that “Russia's aggression has created deep uncertainty, people are worried about the rising cost of living. The EU economy has been hit hard but the starting point” after Covid “was good. The economy is demonstrating resilience overall and we still expect growth in 2022 and 2023. But it will be limited growth compared to expectations”.
Gentiloni: "No to unlimited spending, we don't massacre anyone with taxes"
“I would like to highlight two key messages: we are far from economic normality” and “we are not proposing a return to unlimited spending“, said the European Commissioner for the Economy, Paolo Gentiloni, regarding the new suspension of the Stability Pact in 2023. Next year “national budgetary policies should combine a boost to investments with the control of spending growth current, which is especially important for high-debt countries, which are being asked to ensure prudent fiscal policy next year,” he added.
"Overall, the general escape clause", which will still suspend the obligations of the Pact for the whole of 2023, "will help member states to continue the transition from universal support" to the economy, "offered during the pandemic, to more targeted measures For mitigate the impact of the energy crisis and assist those fleeing war,” added the Commissioner.
Gentiloni then responded indirectly to the words spoken yesterday by the secretary of the League, Matteo Salvini, reassuring that: "TheThe Commission has no intention of massacring anyone with taxes“. With regards to the land registry reform, the recommendations state “to update the cadastral values to the current market values. And I don't think it represents a request to raise taxes but a need for Italy of which the government is perfectly aware,” added Gentiloni.
"Our common priorities are investment and reform – continued the former Premier – This is reflected in the country-specific recommendations presented today, which focus on the implementation of national recovery and resilience plans and on the energy transition. Fiscal policies should continue to shift from universal support provided during the pandemic to more targeted measures."
Italy observed special
Despite the suspension of the Stability and Growth Pact, the EU continues to monitor the trend of public finances in individual countries, including Italy. In the Spring package on Italy, Brussels highlights that our country "is experiencing excessive imbalances. The vulnerabilities concern the high public debt and the weak growth of productivity, in a context of fragility of the labor market and some weaknesses of the financial markets, which have cross-border relevance”.
Italy therefore remains among the subjects with "excessive macroeconomic imbalances", together with Greece and Cyprus, while Germany, Spain, France, Holland, Portugal, Romania and Sweden show imbalances considered "not excessive".
Going into details, the EU Commission explains that in our country the public debt/GDP ratio "started to decrease in 2021 and a further decline is expected, but a fiscal sustainability risk, the financial sector and economic growth”.
Speaking of the Pnrr, the plan “is addressing vulnerabilities, including boosting competitiveness and productivity. However, the growth effect of investment and reforms is likely to take some time to develop and crucially depends on swift and sound implementation“, argues Brussels, recalling that the reforms “address all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Italy by the Council in the European Semester in 2019 and 2020, in addition to any country-specific recommendations issued until on the date of adoption of a plan, explains the Commission”.
The recommendations also mention energy and superbonus. Italy must “reduce dependence on fossil fuels and diversify energy imports. Overcome bottlenecks to increase domestic gas transport capacity, develop electricity interconnections, accelerate the deployment of additional renewable energy capacity and adopt measures to increase energy efficiency and promote sustainable mobility”.
On the 110% superbonus, Brussels highlights that "Italy's ambition to improve the energy performance of its building stock should be calibrated to extend beyond the time period of the Superbonus scheme and the loans under the Recovery and resilience facility". The Commission therefore notes that "any new financing plans for the energy renovation of buildings will have to be adequately aimed at deeper energy renovations, the improvement of buildings with the worst performance and help for low-income families".
