EU’s Economy Chief Sees Positive Signals From Italian Government

(Bloomberg) -- A top European Union official said Italian concessions to lower deficits in the coming years are a “positive signal,” in comments that could help defuse tensions over the country’s budget plans.

Brussels and Rome have been in a war of words since the Italian government said it would increase the country’s budget deficit to 2.4 percent of economic output next year to fund election-campaign promises. But earlier Wednesday, Italian officials said the country may lower budget-deficit targets in the following years and there will be a constant reduction in debt.

“It’s a good signal that the multi-year trajectory has been revised because it shows the Italian authorities have heard the worries and remarks of their partners and the European Commission,” European Commissioner for Economic and Financial affairs Pierre Moscovici said on the sidelines of an event in Paris.

Tensions had been running high with EU Commission President Jean-Claude Juncker warning Tuesday that wrangling over Italy’s budget could provoke a Greek-style crisis in the currency bloc.

“I don’t give a damn,” about threats from the European Union,” Italian Deputy Premier Matteo Salvini said on Italian national television Canale 5. “Someone wants a weak Italy, an Italy on its knees and full of migrants” so that foreign businesses can buy up Italian companies, he said.

Speaking at the International Economic Forum of the Americas conference in Paris, Moscovici skipped potentially inflammatory remarks that had been prepared in advance. According to a transcript of those prepared remarks, Moscovici was to describe the Italian government as ”resolutely euro-skeptic and xenophobic.”

Just before delivering the speech, Moscovici told journalists on the sidelines that he remains committed to “constructive dialog” with Rome and is listening carefully to positive signals.

“It’s in nobody’s interest for there to be a crisis between Rome and Brussels, between the EU and Italy, which is a country at the heart of the euro zone,” Moscovici said.

--With assistance from John Follain.

To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Nikos Chrysoloras, Alessandra Migliaccio

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