“We understand … that further consolidation measures will be adopted … as we estimate that in the current economic context the planned fiscal strategy does not ensure the achievement of a balanced budget in 2013, additional measures will be needed to achieve the targets for 2012 and 2013 …. “.
So here is it. The newspaper Repubblica publishes the request from the EC, the European Commission, and the European Council to PM Berlusconi on what to do next. Among which (see above) a swift operation of further fiscal retrenchment with public expenditure cuts.
Whoever will govern the country in the next months, whether conservative or liberal, will have to take this letter into account. If it will enact what requested, then it will certify the death of
Italy’s economic future and the sure exit from the euro area, possibly following Greece. Indeed, who can tell me what economics textbook is read in Brussels? Who in his right mind would recommend a restrictive fiscal policy in these times of (such a) devastating crisis? With Italian youth unemployment reaching its highest peak since 2004 at 29,3%? Who, for the sake of a so-called stability principle, is willing to put growth at risk thereby risking instead instability and chaos to prevail in the Old Continent?
Macroeconomic policy in Europe by Brussels is with no doubt in a state of disarray and is fostering the demise of the euro area and its project. We need a macroeconomic policy in Europe by Europeans.