It is an overstatement to claim that Italy’s debt constitutes a risk for global markets, but a zero-growth rate can only worsen Rome’s problems, European Commission President Jean-Claude Juncker said in an interview with state broadcaster RAI on Sunday (31 March).
Ahead of a visit to Rome on Monday (1 April), Juncker took credit for having anticipated Italy’s slowing growth, despite repeated reassurances by Prime Minister Giuseppe Conte and Economy Minister Giovanni Tria in the last months of 2018.
“We had a dispute with our Italian friends over the last few months regarding the numbers of the Italian growth,” Juncker said, adding that the forecast announced by Italy’s government has proved to be inaccurate.
According to the Commission, the country’s GDP is forecast to grow by 0.2% in 2019, well below the Italian government’s 1.0% projection made in December, when Rome tried to convince EU partners not to trigger an excessive deficit procedure against Italy.
But forecasts haven’t got better since. The research unit of Italian business association Confindustria recently trimmed the country’s growth forecast to 0% in 2019 and 0.4% in 2020.
“A 0.2% growth means zero growth. It’s a kind of stagnation ensuring that the problems of Italy can only increase,” Juncker said.
The Commission President said Italy’s GDP growth is twenty behind when compared to the rest of Europe, which is why the government is trying to take measures that will allow to revive economic growth.
Asked if Italy can pull it off, he said: “I would like to believe it, but I am not sure.”
Although its public debt is one of the highest in the world and needs to be corrected, Italy does not represent a risk for global markets, Juncker said.
Italy’s China relations and migrant crisis
Today Juncker will meet in Rome with Prime Minister Conte, President Sergio Mattarella and former President Giorgio Napolitano.
“It will be a friendly dinner party and we will talk about all the topics on the European agenda,” Juncker said in the interview.
Italy-China relations are likely to feature on the menu. On 23 March, Italy signed a “non-binding” memorandum of understanding with China to take part in Beijing’s new “Silk Road” infrastructure plan, becoming the first G7 country to join the massive Chinese project.
Juncker deemed China’s Silk Road initiative a “good project” that will allow Asia and Europe to fall into each other’s arms and bring the two continents closer.
“What I don’t like that much is member states that sign agreements on their own with China,” said the Commission chief, adding however that he doesn’t see any serious threat in the memorandum signed by Italy.
Juncker also rejected accusations that the Commission had done too little to help Italy deal with migration.
“In financial terms, we have supported Italy with at least a billion of euros, not lira,” he said. “Perhaps this European solidarity has been insufficient,” Juncker added, “but within the budgetary possibilities we had, we have done everything possible.”
Turning to the contested Lyon-Turin high-speed rail link, Juncker said the project was worthwhile and expressed hopes that it will be concluded as planned.
The ruling Lega and Five Star Movement parties almost caused a government crisis recently because of diverging views on the Alpine tunnel.
Most Five Star voters oppose the railway link, considering it a waste of taxpayers money. But the far-right Lega backs the projects and has struggled in the past weeks to avoid losing EU funds because of delays in completing the connection.
Prime Minister Conte bought the government more time by postponing the final decision until after the EU elections in May.
But the Commission still believes the project is worth pursuing. “The EU grants €888 million to co-finance the project and some credits have already been committed,” Juncker said.
The Alpine connection is important for economic, social and environmental reasons because only 8.8% of goods are currently transported by train, the Commission president argued.
“If this tunnel is built, 40% of goods would be transported on railways,” Juncker said, adding the project provides “the missing link between Portugal and Hungary”.
[Edited by Frédéric Simon]