EU: excessive imbalances, high debt and low productivity in Italy

Italy has “excessive imbalances” from the macroeconomic point of view. “The vulnerabilities concern the high public debt and the protracted weak productivity dynamics, which have cross-border relevance, in a context of fragility of the labor market and the banking sector”. The European Commission writes this in the communication on the spring package of the EU semester, adding that currently Greece and Cyprus also have the same situation, while nine others (Croatia, France, Germany, Ireland, Holland, Portugal, Romania, Spain and Sweden) they have “imbalances”. In total, as many as 24 out of 27 EU member countries (all except Bulgaria, Denmark and Sweden) violate the deficit criterion, due to the Covid-19 pandemic which prompted states to support their respective economies to avoid adding a social catastrophe to a health crisis. Member States’ deficits have skyrocketed above 3% of GDP, as a result of the support policies deployed to counter the crisis. Italy is among the countries that violate both deficit and debt thresholds, but it is not alone: ​​there are 13 countries (Belgium, Germany, Greece, Spain, France, Croatia, Italy, Cyprus, Hungary, Austria, Portugal , Slovenia and Finland) which also violate the debt rule. Obviously, the Commission “believes that a decision on placing countries in excessive deficit procedure should not be taken”. Romania, which was already under procedure and which should have been within the deficit thresholds by 2022, will have to do so by 2024.