On Wednesday 29 May, Ecofin, the EU's Council of Economy and Finance Ministers, will give – barring improbable last-minute surprises – the green light for closing the infringement procedure for excessive deficits. Our country will therefore emerge from the "special surveillance" regime imposed by the European Commission in October 2009 since the public deficit had reached 5,3% of gross domestic product, a much higher figure than the 3% ceiling set by the pact. European stability and growth.
The closure of the infringement procedure had already been in the air for some months. In February, in fact, the European Commissioner for Economic and Financial Affairs Olli Rehn had anticipated that "very probably" before June some member countries, including Italy, would come out of the surveillance regime. But yesterday, informally, the draft of the document came out of the Commission's offices in Brussels and will be submitted to Ecofin for approval.
This draft notes that, after the severe financial maneuvers implemented by the Berlusconi and Monti governments, the Italian deficit has returned within the limit imposed by the Stability and Growth Pact. According to the Commission's latest assessments, that ratio was reduced to a flat 3% last year and will reach 2,9% at the end of 2013.
However, this does not mean, of course, that we can open a season of uncontrolled spending. In fact, the Pact establishes that, together with the closure of the infringement procedure, the Commission will also make known the specific recommendations for our country. Recommendations resulting from a detailed assessment of the economic, budgetary and employment situation as well as the reform and stability programs presented. If it deems it necessary, the Commission may also recommend further structural, budgetary and growth-enhancing measures to be taken in the following 12 months.
From what was learned in Brussels, the recommendations addressed to Italy will concern some critical points which are by no means new. The Commission will ask first of all to continue the budgetary consolidation action. And also to make public administration more efficient; to improve the effectiveness and productivity of the banking system; to accentuate the flexibility of the labor market by focusing bargaining more on the company level than on the national one; to make workers' training policies more attentive and closer to the real needs of the labor market; to reduce the tax burden on labor and businesses; to open the services market more to competition.
In parallel with the commitments requested by the Commission, for the three years following its exit from the procedure, Italy will also be able to take advantage of the rule, established by the Stability and Growth Pact, according to which, like any country in this condition, it will be exempt from the obligation to reduce the debt/GDP ratio by at least 5% per year above the 60% threshold. This regulation is particularly useful for a country like ours, with a public debt that is about to reach 130% of GDP.
The prediction of the imminent exit from the excessive deficit procedure was greeted with "satisfaction" in the rooms of Palazzo Chigi. Where, according to rumors, someone would have commented: "Finally good news for the country". For a more detailed assessment, however, the Ecofin Council is expected to formalize the decision. Meanwhile, the Minister for Economic Development Flavio Zanonato, in an interview, said: "Now that the infringement process is over, we should have a little more room for manoeuvre".
In figures, this room for maneuver should mean an increase of 7-10 billion a year in spending on productive public investment, which could be deducted from the deficit calculation. However, these funds cannot be used to cover current expenses.
Meanwhile, Brussels points out that the abrogation of the excessive deficit procedure is "a clear signal to the markets that a country's public finances are solid and sustainable", and will have the effect of favoring a further reduction in interest on debt public.
And again in Brussels the area of those who support is expanding - considering the fact that in these years of crisis only 4 EU member countries out of 27 have managed to avoid the excessive deficit procedure (to which must be added Bulgaria , Germany and Malta, which withdrew last year) – that the constraints imposed by the Stability and Growth Pact have accentuated the recession, and therefore should be eased to encourage growth.
