ECB blasts Italy over deficit

Rome has not made 'tangible progress', says central bank

(ANSA) - Rome, March 13 - Italy has not made "tangible progress with respect to the recommendation of the European Commission" to bring its budget deficit down to 2.6% of gross domestic product from 3% in 2013, the European Central Bank said Thursday. The ECB told Rome to take the "necessary steps" to reduce the deficit and put the national debt on a "decent trajectory".

The warning comes after Premier Matteo Renzi on Wednesday announced wide-ranging measures designed to boost the Italian economy, which remains weak after emerging from its longest postwar recession last year.

The measures included 10 billion euros in income tax cuts targeting low earners.

Renzi stressed that the moves would be financed by spending cuts and would not lead to Italy breaching the 3% deficit-to-GDP ratio allowed by the Europe, but the EU wants to see more fiscal consolidation The Commission recently said the 2014 budget passed by Renzi's predecessor Enrico Letta did not do enough to bring down Italy's massive public debt of over two trillion euros, around 132% of GDP.

As a result it put Italy under "specific monitoring" over its "excessive macroeconomic imbalances", which include high debt and poor competitiveness. Renzi says the EU must focus increasingly on promoting growth and employment after years of austerity triggered by the eurozone debt crisis that led to unemployment reaching a record high of 12.9% in Italy, with over four in 10 under-25 out of work.