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La Stampa - Italy | Monday, May 27, 2013

Even without deficit procedure Italy must save

The European Commission will decide on Wednesday how to proceed with member states in breach of the EU deficit rules. Since Italy is likely to bring its deficit under the three-precent of GDP threshold in 2013 it can reckon with the excessive-deficit procedure against it being dropped. But the country must not deviate from its austerity policy, the liberal daily La Stampa warns: "The decision expected on Wednesday will be accompanied by a barrage of warnings. … First and foremost that it must reduce labour and corporate taxes and reform the public administration and banks. … So the prospect of the discontinuance of the deficit procedure may be encouraging for the young Letta government, but at the same time it demands a reform of the Italian system which won't be possible without unpopular and painful measures. In addition to fixing the budget, the warning to consolidate also encompasses an instruction to reduce government debt, which Brussels estimates will amount to 132.2 percent of the GDP for 2014. So measures to reduce spending are indispensable."

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