Italy still under EU monitoring: excessive debt worries
“Concerns about high public debt ratios remain unchanged.” Italy is also among the 10 countries still monitored by the European Commission. Again this year, the European executive believes that the country will have to undergo an in-depth analysis (“In-Depth Review”) to verify the evolution of the excessive macroeconomic imbalances already identified last year.
This was stated in the Alert Mechanism Report published today, which asks to verify whether the imbalances identified last year have been corrected or are being corrected or worsening. The other countries concerned are Cyprus, France, Germany, Greece, the Netherlands, Portugal, Romania, Spain and Sweden. To these are also added Estonia, Latvia, Lithuania, Luxembourg, the Czech Republic, Slovakia and Hungary, which had not been subjected to controls last year.
In the case of Italy, according to the report, debt “remains high” and “is expected to remain well above the 2019 level” although it fell to 150.3 percent of GDP in 2021. The deficit, reduced to 7.2 % in 2022, “will continue to shrink”. However, spreads have deviated “significantly” from the eurozone average, increasing funding costs: “The risks to fiscal sustainability are high in the medium term”, continues the report, while they are decreasing to the average level in the long term.
“Weaknesses in the labor market could increase again”, the commission also reports, according to which “prices are destined to rise faster than wages”.
“The unemployment rate increased to 9.5 percent in 2021 and remains relatively high although it is below the 10 percent threshold,” said the report, which projects unemployment to rise again in 2023. “Rates for youth unemployment and long-term rates remain among the highest in the EU”.
The estimates do not include the effects of the next budget law, just passed by the Meloni government. Brussels, Commission Vice-President Valdis Dombrovskis explained today, expects “to receive the complete plan from the new government shortly and we will provide our opinion in the coming weeks”.
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