EU promises struggling Italy whatever it needs
>>BRUSSELS: The EU executive on Friday unveiled a raft of measures to protect the European economy from the coronavirus outbreak, and promised it would do whatever it takes for hardest-hit Italy.
The assurances by EU Commission chief Ursula von der Leyen came a day after ECB head Christine Lagarde stoked fury in Rome by implying that shoring up Italy’s precarious financial situation was not her job. The answer by Brussels was made ever more urgent as the EU predicted that a recession, maybe even a very deep one, was very likely for all of Europe this year.
Ms Von der Leyen said the commission, the EU’s powerful bureaucracy, would try to provide Italy with whatever it needs to overcome the challenge of the coronavirus. “Whatever is necessary, we support. Whatever they will need, we will answer,” Ms von der Leyen, a close ally of German Chancellor Angela Merkel, told reporters.
The commission’s firepower to save Rome and others is limited and would mainly involve reallocating unused EU spending, as well as giving governments a free pass to bail out businesses.
Brussels would also loosen rules on running high public debt and deficits, a sensitive topic for financially overstretched Italy.
Italian Economy Minister Roberto Gualtieri welcomed the commission’s decision “with satisfaction”.
Ms Von der Leyen said member states would receive “maximum flexibility” to boost spending beyond the legal limits, a promise that will also help France and Belgium, both chronic overspenders. Countries “should feel comfortable to take all the necessary measures”, she said.
Known as the stability and growth pact, the rules theoretically limit a country’s deficit to just 3% of annual output and debt to 60%, a number that Italy has more than doubled in recent years.
Italy’s debt pile will grow even more after it announced 25 billion euros (885.1 billion baht) in extra spending to pull itself out of its crisis.
All eyes now are on a meeting set for tomorrow of EU finance ministers who between them have the financial muscle to earn respect on markets that have been punished by the virus fallout. This is especially pressing after the ECB’s Ms Lagarde was forced to row back her dismissal of Italy’s debt problem in Frankfurt on Thursday. An EU official, meanwhile, warned growth in the eurozone and across the EU would fall below “and potentially considerably below” zero in 2020.