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European Commission - Speech - [Check Against Delivery]

Read-out from the College meeting: remarks by Vice-President Valdis Dombrovskis

Strasbourg, 23 October 2018

Good afternoon.

The College met this afternoon with a full agenda.

First, we discussed the Draft Budgetary Plans we received from eurozone Member States. I will come back to this in a moment.

Secondly, First Vice-President Timmermans presented the Commission's Work Programme and our priorities for next year.

He is now presenting it to the plenary:

Our first priority is to find agreement in Parliament and Council on as many of the Commission's legislative proposals as possible. All the legislative proposals to deliver on the ten political priorities of the Juncker Commission are on the table. So far around half of them is agreed. So we need to do better than that.

Second, we will present a limited number of new forward-looking initiatives, notably offering our citizens a strong perspective for the future Union of 27 Member States.

Amongst others, we will be looking to consolidate the success of our Investment Plan, reflecting on how to make Europe more sustainable, and tackling Artificial Intelligence and disinformation. We will also be looking at how to remove remaining barriers to the Single Market, completing the Energy Union, and tackling climate change. And we will strengthen the Rule of Law Framework, the international role of the Euro, and present ideas for 'Communicating Europe'.

Lastly, as it is also our job to make sure that existing EU legislation remains fit for purpose, we will launch a number of new initiatives under the REFIT programme.

Thirdly, we adopted a Communication to follow up on the work of the Task Force on Subsidiarity and Proportionality, which President Juncker created last year, and which reported to the President in July.

The Communication is our contribution to the Subsidiarity Conference, which the Austrian Presidency is organising in Bregenz next month.

The Communication sets out how the principles of subsidiarity and proportionality have been further embedded into the work of the Commission and other EU institutions.

And now let me move to the Draft Budgetary Plans.

And it is with a lot of regret that I am here before you today. Because today, for the first time, the Commission is obliged to request a euro area country to revise its draft budget plan. But we see no alternative than to request the Italian authorities to do so. We have adopted an opinion giving Italy a maximum of three weeks to provide a revised Draft Budgetary Plan for 2019.  

Unfortunately, the clarifications received yesterday were not convincing to change our earlier conclusions of a particularly serious non-compliance with the recommendation addressed to Italy by the Council on 13 July. The Italian Government is openly and consciously going against the commitments made.

Europe is built on cooperation. The euro area is built on strong bonds of trust. This is underpinned by rules that are the same for everybody. If trust is eroded, all Member States take damage, our union takes damage.

Breaking rules can appear tempting at first look. It can provide the illusion of breaking free. It is tempting to try to cure debt with more debt. But at some point, the debt weighs too heavy. And at the end of the day, you end up having no freedom at all. This is why we agreed to control the debt, together.

In 2017, Italy's debt stood at 131.2% of GDP. This is the second highest level of public debt in the European Union and one of the highest in the world. In 2017, it represented an average burden of € 37 000 per inhabitant.

The total cost of servicing Italy's debt is among the highest in Europe. It has to be covered by taxpayers every year. To give an example, last year, Italy spent about the same amount on servicing debt as it dedicated to education.

Experience has shown time and again that higher fiscal deficits and debt do not bring lasting growth. And excessive debt makes your economy more vulnerable to future crises. Therefore, if looser fiscal policy affects confidence, it can actually have the opposite effect on growth. So keeping sound fiscal policies and confidence is crucial. It is in the interest of Italy and in the interest of the whole Euro area.

This is about making sure that Italian companies can raise funding at low interest cost, which enables them to develop and create jobs. This is about young Italian families that seek to buy their first home and need a bank loan at a cost that they can afford. And this is about generational fairness: What message are we sending to the young generation, by leaving them with such a debt burden?

An additional point:

You will recall that in May, following the Article 126.3 report, the European Commission did not propose to open the Excessive Deficit Procedure related to debt. Mostly because of Italy's broad compliance with the preventive arm of the Stability and Growth Pact.

The current plans are a material change, which may require a reassessment of that conclusion.

The ball is now in the court of Italy's government. We know the starting point. And we have three weeks for an intensive dialogue, which we will conduct with a constructive and open mind. Yet, we are entrusted by all Member States to uphold mutual commitments and common interest. This is our job and duty.

Thank you.


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