Italy: Brussels downgrades its growth forecasts

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Pierre Moscovici, European Commissioner for Economic and Financial Affairs presented on Thursday 8 November the economic forecasts for the EU. REUTERS / Francois Lenoir

Growth is stagnating throughout the European Union. The European Commission has lowered its economic forecasts for this year and for next year. In this context of a slowdown that should continue in 2020, Italy is particularly singled out. In particular, the European Commission has estimated that the Italian budget was based on overly optimistic growth forecasts. Italy's response was not long in coming.

Italian Economy Minister Giovanni Tria accused the EU executive of technical failure in his forecasts. According to Rome, in drawing up its forecasts, Brussels has lacked attention and has shown partiality, despite the information provided by Italy.

The European Commission, for its part, estimates that Italian GDP growth should not exceed 1.2% next year, compared with 1.5 expected by Rome. Italy, which has until next Tuesday to present a revised draft budget, without which it is exposed to an excessive deficit procedure. A measure that could lead to financial penalties.

The problem is that Italy refuses to give in and announces that it will not come back on its draft budget.

This standoff with Brussels has contributed to market turbulence in recent weeks, with the specter of a possible return of a debt crisis.

In a statement, the IMF is worried about a contagion of the financial problems of Italy to the most fragile European countries. According to the institution, Rome must first reduce its budget deficit in order to reduce its debt.