Brussels considers more fiscal leeway for Italy and Greece on energy and defence

The European Commission has given an initial response to the requests for greater fiscal flexibility put forward by Italy and Greece on energy and defence spending, though accompanying it with a call for caution on the two countries’ public finances.

Brussels’ position was outlined by Commission Vice-President Valdis Dombrovskis, who ruled out the introduction of new general flexibility measures for all member states, but announced that Italy’s request will undergo a more thorough examination than has been carried out so far. According to Dombrovskis, the budget rules framework already in force takes into account the rise in inflation recorded in recent months, a factor the Commission considers when assessing the margins available to individual countries.

On the Italian side, Economy Minister Giancarlo Giorgetti commented on Brussels’ opening by saying he was confident about the outcome of the ongoing talks with the Commission.

The issue concerns the possibility, for Italy and Greece, of excluding or reducing the weight of certain spending items — those related to energy and defence — in the calculation used to determine compliance with European budget constraints. This is a request that directly affects how Brussels will assess the two countries’ public finances in the coming months, in a context where both governments have signalled the need for additional spending on these two fronts.

The available file does not specify a timeline for the conclusion of the examination announced by Dombrovskis, nor does it clarify what concrete form the possible flexibility margin granted to Rome and Athens might take. It remains to be seen, in the upcoming technical steps between the economic ministries and the Commission, whether today’s verbal opening will translate into an actual change in the parameters applied to the two countries.