A handful of billions separate Rome from Brussels. To defuse the bomb infringement procedure, the European Commission is asking Italy to reduce the 2019 GDP deficit from 2,4% provided for in the update note to the Def until at 1,8%. This is the official position, but unofficially - also considering additional flexibility for the collapse of the Morandi Bridge and the hydrogeological instability - Europe is willing to go up to at 1,95%. This is the latest offer put on Jean Claude Juncker's table: take it or leave it.
At the moment, the efforts of the yellow-green government are not enough to satisfy Brussels' requests. At the negotiating table, the Prime Minister, Giuseppe Conte, is authorized by his deputies to propose a reduction in the deficit to 2,1%. Too little: the distance between supply and demand is about 4 billion.
To bring the goal of an agreement closer, one would be needed substantial modification of the 100 quota: The Commission would like the pension counter-reform to take effect only next year, with a series of temporary windows which, however, would not weigh on the 2020-2021 accounts. However, the League has already opposed a sharp refusal.
Meanwhile, an unexpected side for Italy could come from surrender of Emmanuel Macron to yellow vests.
To stem the protests that are rampant in the country, the French President has announced a series of measures: an increase of 100 euros in minimum wages, tax relief from overtime and tax cuts for the poorest pensioners. All this will have a significant impact on French public finances, to the point that the Paris deficit-GDP ratio could break through the 3% ceiling established by the Maastricht rules, reaching 3,4%.
From Italy's point of view, Macron's capitulation is an opportunity. At the next European Council, scheduled for 13 and 14 December, Conte will try to leverage the French situation to soften Brussels' position on the yellow-green manoeuvre.
That's not to say it's enough. “The Italian government – warns the EU commissioner for economic affairs, Pierre Moscovici – seems more open to finding ways to reduce the 2019 deficit. But if they want to change our analysis, they need to find concrete figures and commitments”.
MOSCOVICI: FRANCE MAY OVERBREACH, THE RULES SAY SO
In an interview with Le Parisien, Moscovici said that the comparison between France and Italy doesn't hold up: "Exceeding the 3% deficit limit is possible in a limited, temporary way and under exceptional conditions, but every word counts in the sense that any excess of 3% must not extend for two consecutive years nor exceed 3,5% per year. There is no leniency, it's our rules, just our rules. Above all, let's not act as if there were excessive severity on one side and I don't know what laxity on the other. The comparison with Italy is tempting but wrong, because they are two totally different situations. The European Commission has been monitoring the Italian debt for many years, something it has never done "for France".
