Giorgetti on defense spending, stupid and senseless rules

Luxembourg (ANSA) – The Minister of Economy Giancarlo Giorgetti calls for “finding a solution to update” the rules of the Stability Pact “to the emergency we are experiencing, to avoid them seeming stupid and senseless.” In particular, Rome is focused on the national safeguard clause, that margin of flexibility that allows countries to spend more on defense – up to 1.5% of GDP each year for four years – which Italy has not activated to date. Unlike 16 other EU states.

According to Giorgetti, it risks turning into an asymmetric trap: it can prevent the EU excessive deficit procedure from being triggered if the increased defense spending brings it into the “excessive deficit” area (being over 3% of GDP and not temporarily), but for those already in procedure, there seems to be no ‘discount’ by activating the clause.

“Italy is committed to promptly exiting the infringement procedure. However, we are facing a problem that we must resolve,” the minister recalled. “Accepting the invitation to increase defense spending would forever prevent our exit from the infringement procedure.” “This asymmetry in fiscal rules” was clearly foreseen by lawmakers, explained EU Commissioner for Economy Valdis Dombrovskis.

“For the opening of the excessive deficit procedure – he added – we can take into account other factors and exceptional circumstances, for example, the activation of the clause.” For the closure, “the regulation is very clear and strict: the deficit must be brought below the reference value of 3% of GDP,” remaining there in the future, “and relevant factors must not be taken into consideration” (June 19).