Renzi’s Bold Budget Proposal

In an effort to boost economic growth, Italian Prime Minister Matteo Renzi released a budget proposal on October 15 that challenges the European Union’s current austerity measures.  Renzi’s new budget calls for heavy tax cuts and increased government spending.  The Prime Minister has called his plan, which includes tax cuts of €35 billion over three years, “the biggest [tax cut] ever done in the history of the Italian Republic.” The European Union remains skeptical about Renzi’s proposal amid ongoing scrutiny over Italy’s fiscal policies. Italy’s debt already exceeds 130 percent of its GDP and critics believe that weakened austerity measures could reverse the country’s recent growth. Moreover, alterations to Italy’s current budget would breach European Union regulations requiring that annual deficits should not exceed 3 percent of GDP. Susanna Camusso, the leader of Italy’s largest trade union, warned, “ [The] mix of spending cuts and tax reductions for some will keep the country in a state of recession.”

Renzi disagrees, having stated that Italy’s recent economic stabilization under European Union regulations merits him a degree of flexibility. Defenders of Renzi’s plan are quick to point out that this would not be the first time a member of the eurozone  has bent its budget rules, citing Spain and France as frequent deviants. Renzi has made his position on this dilemma clear, stating, “Some of us believe that European rules need to be respected and some want to apply them with a bit more fantasy.”

Renzi has repeatedly expressed his confidence in reduced austerity measures, stating that “the budget is a sign of Italy’s great strength, of its pragmatism and stability.” Until a vote is made by the EU Parliament, the proposed budget remains the responsibility of EU commissioners.