EU says Italy must deliver ‘credible’ response to debt problem

BRUSSELS-Agence France-Presse

The European Union warned on May 23 that Italy must reduce spending to cut down its enormous debt pile in a direct challenge to the eurosceptic and populist government set to take office in Rome.

“The Italian debt is an important question for Italy’s future (...) This requires a credible answer,” said EU Economic Affairs Commissioner Pierre Moscovici at a news briefing.

The incoming coalition in Italy, a founder member of both the EU and the euro, has irked financial markets and European governments amid its loud refusals to stick to public spending and debt targets set by Brussels.

“Our political message is very clear. Italy needs to continue to reduce its public debt which is indeed second highest in EU after Greece,” said European Vice President Valdis Dombrovskis, the bloc’s enforcer for the euro.

The third largest economy in the eurozone, Italy is weighed down by 2.3 trillion euros ($2.7 trillion) of public debt.

This is 132 percent of its gross domestic product (GDP), the highest ratio anywhere in Europe apart from Greece and far from the EU cap of 60 percent of GDP.