(Reuters) - The European Commission asked Italy on Monday to tighten its budget this year to rein in an excessive public debt but fell short of opening a disciplinary procedure against the euro zone's third largest economy.
The Commission's request for additional budget tightening removes any room for fiscal easing for Prime Minister Matteo Renzi, who has already cut income tax on low earners over the second half of this year.
The Commission called on Italy to "reinforce the budgetary measures for 2014 in the light of the emerging gap relative to the Stability and Growth Pact requirement, namely the debt reduction rule."
Italy's public debt has risen by 29 percentage points since 2007 and stood at 132.6 percent of gross domestic product at the end of last year, compared with the EU's reference ceiling of 60 percent.The government forecasts it to rise further to 134.9 percent this year.
The Commission said the economic scenario on which Italy had based its most recent budget plans was "slightly optimistic" and its target of reducing its structural budget deficit to 0.2 percent of output this year would therefore not be met.
reuters.com
The Commission's request for additional budget tightening removes any room for fiscal easing for Prime Minister Matteo Renzi, who has already cut income tax on low earners over the second half of this year.
The Commission called on Italy to "reinforce the budgetary measures for 2014 in the light of the emerging gap relative to the Stability and Growth Pact requirement, namely the debt reduction rule."
Italy's public debt has risen by 29 percentage points since 2007 and stood at 132.6 percent of gross domestic product at the end of last year, compared with the EU's reference ceiling of 60 percent.The government forecasts it to rise further to 134.9 percent this year.
The Commission said the economic scenario on which Italy had based its most recent budget plans was "slightly optimistic" and its target of reducing its structural budget deficit to 0.2 percent of output this year would therefore not be met.
reuters.com
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