ROME, June 19 (Reuters) – Interest rate rises set by the
European Central Bank (ECB) to curb inflation will take their
toll in terms of lower economic growth, Economy Minister
Giancarlo Giorgetti said on Monday.
The ECB raised euro zone borrowing costs to their highest
level in 22 years last week and said stubbornly high inflation
all but guaranteed another move next month.
“The real problem is that we will pay a price in terms of
potential growth that will not be trivial due to this war to
fight inflation,” Giorgetti said during an event in Rome.
“Fiscal and monetary policies must balance out interventions
otherwise the growth mirage will be postponed until a later
date,” he added, speaking about growth prospects in Italy and
other European countries, including Germany.
With a “general outlook in the EU which is not favourable,”
the minister reiterated Rome’s calls for more flexibility over
the way investments are considered under new budget rules being
drawn up for the bloc.
“We have no intention of violating or breaking the (European
Union) system,” Giorgetti said.
Brussels proposed in April that governments should ensure
public debt falls by an individually negotiated amount over four
years and stays on a downward path for a decade afterwards.
Governments could get more time to reduce their debt and
deficit, for instance over seven years, if they implement
reforms that increase fiscal sustainability, boost growth or
invest in areas that are EU priorities like the transition to a
green and digital economy, social rights or in security and
defence.
Giorgetti also complained about what he defined as a
“particularly quibbling approach” by European Union technicians
over the post-COVID-19 recovery fund.
Italy is struggling to meet the so-called “targets and
milestones” agreed with the European Union in return for
post-COVID funds, highlighting concern over whether Rome will be
able to get all the 191.5 billion euros ($209.06 billion)
through 2026 it is hoping for.
“It is an epic battle between Italian and European
bureaucracy,” Giorgetti said.
($1 = 0.9160 euro)
(Reporting by Giuseppe Fonte; Editing by Alison Williams and
Jonathan Oatis)
