Italy’s public debt to hit record high in 2019: EU

Italy's public debt to hit record high in 2019: EU
Pierre Moscovici, European Commissioner for Economic and Financial Affairs (L) and Italy's Finance Minister Giovanni Tria in Brussels. Photo: EMMANUEL DUNAND/AFP
The European Commission cut its eurozone growth forecast for 2019 on Tuesday, with overspending by populist-run Italy a major concern.

The EU has warned that Italy's public debt will balloon to a record 133.7 percent of GDP in 2019, a situation that could reopen a bitter feud between Brussels and Rome about the populist government's spending.

Italian debt would grow even further in 2020 to 135.2 percent of GDP, it said; well over commitments made to Brussels, and more than double the EU's 60 percent limit.

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The commission said the economy across the EU as a whole — still including Britain – would grow by 1.4 percent instead of its earlier forecast of 1.5.

In its quarterly forecast, the EU executive blamed the downward trend on the slowdown in China and US protectionism that has crimped global confidence.

“The European economy is showing resilience… yet risks to the outlook remain pronounced,” said EU vice president Valdis Dombrovskis, warning of “further escalation of trade conflicts and weakness in emerging markets, in particular China.”

Valdis Dombrovskis, European Commission vice-president in charge of the Euro, Social Dialogue, Financial Stability, Financial Services and Capital Markets Union. Photo: AFP/John Thys

Europe should also “stay alert to a possible no-deal Brexit,” he added, with negotiations on the EU's divorce with the UK stalled and no agreement in sight.

The alarm over Italy's debt comes just as the eurozone's third-biggest economy returned to slender growth earlier this year after a short recession.

Last year's downturn had put pressure on the populist government, which took power in June on the back of big-spending electoral promises.

Belgium, Spain, France and Italy are expcted to commit significant public overspending in 2019, with debt levels close to or above 100 percent of GDP, the EU said.



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