Italy Given Two Years To Correct Deficit

As indicated earlier in the week, the EU Commission has given Italy two years to correct its deficit.

The European Union on Wednesday gave Italy until the end of 2007 to cut its budget deficit in line with euro-zone rules. The EU head office said Italy has been violating the budget rules underpinning the common currency by running deficits above 3 percent of its gross domestic product in 2003 and 2004 and is set to do so this year and next. But due to weakness in the euro-zone’s third-largest economy, the head office said it will give the country two years instead of just one to bring the deficit back in line.”

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “Italy Given Two Years To Correct Deficit

  1. And then what happens? Will they just let them go once again or finally punish them?

  2. Well, to be exact they’ve got only 1,5 years to get affairs in order, not two. As for punishment, without any structural reforms the Italian blowback will be far harder then anything the EC can diss out. It might give them a good excuse to finally get their act together.

  3. “And then what happens?”

    Well this is one of the issues. I’d like to see what they really do with Portugal and Greece before arriving at too many conclusions.