EU warns Italy over budget deficit

Rome, March 14: The European Central Bank (ECB) has warned Italy over lacking results in reducing its budget deficit.

“Italy has not made tangible progresses in respect of the European Commission’s recommendation to bring its deficit down to 2.6 per cent of GDP from the 3 per cent in 2013,” Xinhua quoted the ECB as saying Thursday.

The Central Bank asked Italy to implement “the necessary steps” to reduce its deficit and to put its public debt on “a downward path”.

The finance ministry released a statement Thursday, saying the ECB report was not intended as an immediate reply to the plan of new measures released Wednesday.

Italy’s economy, the eurozone’s third largest, is still struggling to emerge from its worst recession in 40 years.

It showed a meagre 0.1 per cent growth rate in the fourth quarter of 2013, and the European Commission recently downgraded its growth forecast to 0.6 per cent for 2014. Unemployment reached a record high rate of 12.9 per cent in January, with a 42.4 per cent rate among young people.

The EU Commission put Italy, Slovenia and Croatia on its watchlist at the beginning of March because all three countries have high public debt and weak competitiveness.

Italian debt is the second largest in the eurozone after Greece’s, equaling 132.7 per cent of economic output in 2013. EU predictions showed it might reach 133.7 this year.