The European Commission cuts growth forecasts for Italy. After +0,9% in 2018, Brussels is now forecasting +2019% for 0,1, which should be followed by +0,7% in 2020. All three estimates are 0,1% below forecasts by three months ago.
As for the deficit-GDP, this year it should rise to 2,5%, from 2,1% in 2018, while in 2020 it could exceed the Maastricht limit by half a point, reaching 3,5%.
Il debt, from 132,2% last year, will reach 133,7% in 2019 and 135,2% in 2020.
Finally, the structural deficit: from 2,2% in 2018 it will rise to 2,4% this year and to 3,6% in 2020. In the Rome-Brussels agreement on the 2019 budget manoeuvre, however, it was envisaged that the structural deficit would not worsen this year.
“The forecasts – specifies the Commission – are based on a no-policy-change scenario and do not incorporate the effects” of the VAT increase envisaged by the safeguard clauses.
According to Brussels, Italian public spending "is destined to increase significantly following the introduction of the citizen's income and various provisions regarding pensions, including the new early retirement scheme (or quota 100, ed.)", even if "some savings are expected from a new spending review".
The EU Executive also provides that “the labor market will weaken considerably” in the two-year period 2019-2020)” and “employment growth will stop in 2019”.
"In Italy, weak economic growth will cause the budget deficit to rise", commented the European Commissioner for Economic Affairs, Pierre Moscovici, at the press conference to present the spring economic forecasts.
“It is not today that we will address the question of Italy's compliance with the Stability and Growth Pact – he added – we need a little patience: we will certainly have to go back to it but the Commission will start assessing compliance in the Spring Package, early June."
The European Commission has also cut its estimates of GDP growth in the Eurozone: +1,2% in 2019, against the +1,3% expected at the beginning of February, and +1,5% next year (from +1,6%).
As for inflation, the estimate of +1,4% this year is confirmed, while the estimate for next year is reduced to 1,4% (in February it was estimated at 1,5%). 2018 had closed at 1,8%.
The Vice-President of the Commission, Valdis Dombrovskis, invites us to "stay alert for a possible no deal for Brexit, for political uncertainties and a possible return to the vicious bank-sovereign debt cycle".
Secondo Moscovici, in any case, "the European economy will continue to grow in 2019 and 2020, growth remains positive in all Member States and good news continues to arrive on the employment and wage growth front: this indicates that the economy in the face of a less favorable global situation and persistent uncertainty. But we must be ready to support the economy moreif necessary, and to adopt further reforms to stimulate growth. Above all, we must avoid slipping into protectionism, which would only exacerbate the existing social and economic tensions in our societies".
