By Francesco Guarascio
BRUSSELS (Reuters) – Italy’s prime minister defied European Union concern over its debt on Thursday, saying the bloc’s fiscal rules should focus on growth rather than stability, and blaming partners for unfair tax competition and excessive surpluses.
Arriving at a meeting of European leaders in Brussels, Giuseppe Conte dismissed warnings over Rome’s growing debt and said Italy was complying with EU fiscal rules.
“We have a stability and growth pact that focuses on stability and not on growth. We want to invert this order,” Conte told reporters.
Under current rules, EU states with large public debts should gradually reduce them, but Rome’s debt increased last year and is forecast to expand further until 2020.
Conte said the Italian government will complete the assessment of its finances in a meeting on Wednesday after which he expects new estimates to point to a 2019 deficit of around 2.1% of output, below the EU commission’s expectations.
It is unclear, however, whether this would be enough for the EU Commission to stop a disciplinary procedure against Italy, which Brussels has said would be warranted on the basis of 2018 data and EU forecasts.
A clarification could come if Conte and commission president Jean-Claude Juncker talk on the sidelines of the two-day summit that started on Thursday, but no meeting was yet planned, an EU official said.
At the summit where EU leaders are discussing the bloc’s top jobs for the coming years, Conte echoed belligerent tones used by Italy’s deputy prime minister and far-right leader Matteo Salvini in attacking other EU members for unfair competition.
He said there was something wrong in the fact that Italian firms relocate to other EU states for tax reasons – a probable reference to low corporate levies and lenient regulatory approaches in places like Luxembourg, the Netherlands or Ireland.
“I want to compete, but on fair terms,” he told reporters before the summit, where he arrived hours after a flurry of bilateral meetings among other leaders.
In a remark possibly directed at Germany, Conte said countries that do not reinvest their large surpluses were not helping the Italian economy.
Berlin has for years posted large trade surpluses and is widely criticised for having pumped too little of them into the economy. This, the argument goes, could have reduced growth rates domestically and in other inter-linked euro zone countries, including Italy.
Conte had expressed this criticism in a letter sent to EU partners just before the summit.
(Reporting by Francesco Guarascio; Editing by Kevin Liffey, Hugh Lawson and Andrew Cawthorne)