The battle of the Italian government led by Matteo Renzi to get more flexibility fromEuropean Union it's a fair fight. This is stated by an editorial in the Financial Times which sides with the decision of the Italian executive to increase the deficit, instead of reducing it as prescribed by the EU, and with the requests made by the Italian prime minister to the Commission.
Italy, in fact, is one of the countries whose 2017 Budget Law ended up in the crosshairs of the European Commission, which asked to change it due to the excess deficit, rising to 2,3% instead of falling to 1,8% as expected last year, and due to the increase of the structural deficit, which will increase by 1,6% in 2017.
Even if the reasons given by Renzi for these differences, i.e. the exceptional expenses linked to the earthquakes and the migration issue, are, according to the Financial Times, rather weak (since the expenses relating to the two cases are relatively small), the newspaper supports the requests of the Italian premier and his choices in the economic field.
" expansive fiscal policy, allowed by an accommodating monetary policy – reads the editorial of the Financial Times – has helped the growth of the Italian economy in the recent past. Italy has substantial room for maneuver to exploit, given that even with the expected increase in the deficit, its deficit remains below the 3% ceiling, with 2-year BTPs well below the XNUMX% yield”.
Rather than cutting the deficit, according to the British newspaper, Renzi could include measures aimed at cutting taxes in the budget law, such as bringing forward to 2017 the reduction of the income tax scheduled for 2018 and the expansion of the VAT taxable base.
“Italy, which until a few years ago was plunging into a full-blown debt crisis – concludes the Financial Times -, seems to have become more solid also thanks to a supportive fiscal policy. Matteo Renzi is right. A premature attempt to squeeze the deficit would be counterproductive."
