We're not there yet. Between the requests of the European Commission and the proposals of the Italian Government there remains a gap of approximately two billion euros. The reason? The new cuts to the maneuver launched on Sunday at Palazzo Chigi do not entirely convince Brussels. In particular, the discussion is not on the nominal deficit/GDP but on the structural one, i.e. the one net of one-off payments, effects of the economic cycle and exceptional expenses (such as, for example, exceptional expenses for hydrogeological instability or privatizations). It is here that the negotiation risks wrecking.
Last week the Commission accepted the Italian proposal to bring down the deficit-GDP ratio forecast for 2019 from 2,4 to 2,04%, a reduction that corresponds to cuts of 6,4 billion. In reality, to fully comply with European rules, the Italian deficit should not exceed 2% of GDP, but in Brussels they have shown themselves willing to avoid a further drop below 2,04% - unmanageable for the Government from the media - as long as Rome admitted that he has doubled the growth forecasts for the years to come.
THE LATEST CUTS HAVE NOT CONVINCED BRUSSELS
The problem is that, once the agreement was found, the Commission realized that even the 2,04% presented by Prime Minister Giuseppe Conte was the result of slightly too optimistic estimates. For this reason, last Friday Brussels asked for further cuts of 3,5 billion. The new cuts were decided on Sunday in Rome and sent by email to Brussels on Monday, which, however, considered only a part of the new commitments, amounting to 1,5 billion euros, to be credible. Moral: there are still two billion to go.
DIVIDED COMMISSION: TOMORROW MEETING (MAYBE) DECISIVE
However, time is also scarce by now, given that tomorrow – Wednesday 19 December – the Commission will hold its last meeting before Christmas, which for months has been indicated as the decisive one for Italy's destiny. If a solution is not found by today, the hypothesis of the infringement procedure will once again become concrete.
On this point the Commission is divided between hawks and doves: the former (led by Vice-President Dombrovskis) have lost patience and would like to punish our country immediately, while the latter (led by Commissioner Moscovici) aim to postpone the decision to January, in hope to reach an agreement in extremis.
THE HAWKS' REQUEST: IMMEDIATELY START THE PROCEDURE
At the moment we are at a standstill, considering that the Italian question does not appear on the agenda for tomorrow's meeting. However, if convincing proposals do not arrive from Rome by tonight, the hawks will certainly ask to launch the procedure. In any case, the final word would rest with the EU Council on 22 January, but for our country obtaining a favorable opinion from the Commission would be fundamental, because it would mean not having to play everything at the table of governments, which is far more unpredictable.
THE DOVES WANT THE REFERRAL TO JANUARY
If Moscovici's position prevails, the Commission will give Italy time to approve in Parliament a maneuver which in fact would remain sub judice until January, when the Community Executive would return to express itself, this time definitively.
In an interview with Rtl radio, Moscovici assured that he is working “to avoid the infringement procedure against Italy. I am working – he added – to ensure that Italy is not punished, and I am confident”.
THE SPECTRUM OF THE INTERIM EXERCISE
But at this point it is not even said that Italy will be able to approve the budget law by December 31st. New cuts to basic income or the 100 quota would be unacceptable to the government, as would a selective increase in VAT. Provisional exercise is now a concrete possibility. If it were to come true, the government's days would probably be numbered.
