The EU Commission will examine more thoroughly the Italian requests for fiscal flexibility to deal with inflation, but in the meantime calls for prudence and respect for the spending plans agreed with Brussels. For his part, the Minister of Economy Giancarlo Giorgetti says he is confident that Italian reasons will find space in the interpretation of the rules. Meanwhile, Italy has received the first green light from Brussels for the national safeguard clause for energy and defence. In the meantime, a clear halt has arrived from the 'frugal' countries and beyond, Holland and Belgium above all, to the requests for new flexibility. "We will examine the requests of Italy and Greece more thoroughly.
Today I had talks with both Greek Minister Kyriakos Pierrakakis and Minister Giorgetti to discuss the situation", explained European Commissioner Valdis Dombrovskis. “The fiscal rules framework already contains elements that help and take into account the issue of rising inflation and the impact of higher inflation on the growth trajectory of net spending,” he stressed. Amid the turbulence in global bond markets and rising spreads in the eurozone, "fiscal prudence is needed." "Member States should stick to the objectives of the medium-term fiscal structural plans and use the flexibility available under the national escape clause with caution," he warned. The new fiscal framework, he recalled, "already contains various elements of flexibility to address the current situation in a balanced way", "we cannot continue to introduce new forms of fiscal flexibility".
Dombrovskis made no reference to Rome's hypothesis of not using the tax revenue linked to inflation only to reduce the debt. However, he warned that the rules of the Pact are anti-cyclical and also thanks to this "an increase in interest expenditure must not be compensated" in the spending plan. Giorgetti, for his part, reported a "broad debate on the negative repercussions on public finances caused by inflation", in which the Italian proposal "received numerous consensus, net of the traditional doubts of the 'frugal' countries". "We asked the Commission for further reflection on the issue in order to correctly interpret the factors relevant for compliance with the current Stability Pact", he explained.
"We are confident that the good technical reasons will be able, with appropriate insights and adequate forms, to find the correct interpretation of the rules also within the energy clause already approved with decisions consistent with the sustainability of public finances". On the national safeguard clause (NEC) front, the Commission has meanwhile positively concluded the evaluation of the Italian request, presented on 11 September, believing that it does not put at risk the sustainability of public finances in the medium term. The file now passes to the Council, which will have one month to give the final green light by activating the clause. In the government's intentions, the Nec should allow Italy to use budget margins of up to 1.5% of GDP overall, equal to around 35 billion euros, between 2027 and 2028: around 14 billion for energy measures and the rest for defence. Meanwhile, among the frugal, against new flexibility, the most explicit was the Dutch minister Eelco Heinen, who said he was "tired" of the topic: "Every time a problem arises I always hear the same thing: 'let's change the fiscal rules'. Adding debt to debt makes the problems bigger. We need to spend less and make reforms. Running away from problems is not the solution".
