It took place in Warsaw, Poland, theEcofinthe meeting of the Ministers of the Economy, Finance and Treasury of the Member countries of the European Union. At the end of the summit, the European Commissioner to the Economy Valdis Dombrovskis He reiterated that there are no conditions to suspend the stability pact.
The Minister of the Italian Economy Giancarlo Giorgetti However, he underlined that, in case of economic disaster due to the commercial war, the European rules on debt would be automatically suspended. The owner of the Finance Dicastery also reiterated the Italian commitment to the increase in military expenditure.
What Giorgetti said on the duties
Giorgetti’s statements are not a direct contradiction of those of Dombrovskis. They seemed rather a way of remembering that, in the same Stability pactcircumstances in which the budget rules for the member countries of the European Union are automatically suspended are contemplated.
If the disastrous forecasts are true for the consequences of commercial policy and we go to the recession, at that point the general clause seems quite obvious to me. If, on the other hand, these disastrous consequences are not there, because this commercial war does not start, obviously article 25 will not be activated.
Dombrovskis had said just before the European Union, at least for the moment, does not see the economy of the blockage to go to a recession, despite the duties. The impact on the GDP of the EUeven in case of permanence of American duties, it should be 0.6%. The US would suffer much more, risking an impact of 3.6%.
The parameters on debt and deficit
The stability pact is the tool provided for by the European legislation that obliges member countries to maintain certain budget and debit limits in order to be part of the block.
The two most important parameters are those that establish:
- the maximum deficit/GDP ratio (3%);
- The maximum debt/GDP ratio (60%).
Italy has a deficit/GDP ratio of 3.4% and a debt that represents 135% of GDP. For this reason it is forced, from the stability pact, to a very rigorous policy on public accounts.
How to suspend the stability pact
Article 25 of the Treaty on the Stability Pact, however, provides that, in the event of very serious economic crises In which state intervention is required, these rules can be suspended. This is what happened during the pandemic of COVID-19.
The stability pact is fundamental for the functioning of the European Union. In order for the EU to be a reliable financial entity and make available to plans such as the PNRR, each of its components must be solid. Member States must therefore guarantee sustainable debt.
The increase in defense expenses
On the sidelines of the Ecofin, after presenting his anti -duties plan, Giorgetti also returned to the theme of Defense expenses. Italy is one of the few NATO countries that still does not spend at least 2% of the GDP In its army and other national security systems, and with the arrival of Trump at the White House, the pressure on this front has increased a lot.
The Minister of Economy assured that our country will reach the minimum parameter asked by the Atlantic alliance without spoving the budget constraints. In this way, it could take advantage of the investments supported by the European rearmament plan, which will be carried out in part in derogation from the stability pact, to further strengthen its national security structure.
