Italy says ECB war against inflation will hit growth
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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.
