Debt, unemployment and reforms: Italy still a cause of concern, Ecofin ministers said

Bruxelles – Italy remains a cause for concern among its European partners, the Economic ministers stressed in the Council conclusions on macroeconomic and fiscal guidance to the member states. “Still high unemployment, low investment, subdued wage growth and high debt levels are all a drag on growth”, the two-pages document states. There are no explicit references to any specific country, but the identikit traced in Brussels responds to the Italian situation. Italy has the second highest debt of the whole EU, at around 130% in relation to GDP, and has has the fourth highest rate of unemployment of the Eurozone (11% as Cyprus, and behind Greece and Spain, according to the latest Eurostat estimates). Furthermore, the Ecofin council recalled the importance of restructuring the banking sector. “The level of non-performing loans is receding, but it remains high in a number of Member States and continues to be an obstacle to bank profitability, hindering the financing of the real economy”. Also in this case references to Italy are clear. The government has been able to reduce the level of loans difficult to be repaid, but their quantity is still too high.

All EU Member States, especially those with the embalances highlithed by Ecofin, need to “pursue structural reforms to modernise economies”. Such reforms are considered “essential” in order to o enable the economy to deal with shocks and improve economic resilience. Here we have the European concerns on the national capability in keeping the momentum as done until today, as admitted by the Italian minister of Economy, Pier Carlo Padoan. Speaking at the end of the Ecofin meeting, he revealed that the other twenty-seven ministers “all pose a question” related to Italian committment. “They are all aware that in the current situation what is foreseen is a scenario of uncertainty. Since they link it to the fact that in four years of economic policy stability Italy moved steps forward, there is an implicit or explicit concern about the a possible disruption of this progress toward stability and growth”. Both the electoral campaign and the unknowns due to the composition of the next Italian government affect the Italian credibility. Whoever will rule the country will have not only to respect the deficit and debt parameters, but also going on with reforms.