EU unlikely to approve new fiscal rules this year, says Italy minister

The European Union is unlikely to agree on new fiscal rules by the end of this year as planned, Italian Economy Minister Giancarlo Giorgetti said on Monday.

The EU rules, called the Stability and Growth Pact, have been suspended since 2020 to help governments deal with the Covid-19 pandemic and then the February 2022 Russian invasion of Ukraine and the resulting increase in energy and food prices.

They are due to be reimplemented in 2024 and the EU is working against the clock to establish a new rule book acceptable to all member states, with Italy favouring a more lenient approach than some northern European governments.

Giorgetti told reporters a deal was probably out of reach by the end-year deadline, something the European Commission was now coming to terms with.

He said the EU executive had already drawn up "a sort of guidance in the event the we don't manage to approve a new Pact by the end of the year, which is perhaps the most likely outcome."

Italy is preparing a difficult 2024 budget in which it will seek to meet Prime Minister Giorgia Meloni's tax cutting promises while at the same time reducing the deficit while faced with an economic slowdown.

Meloni on Monday appealed to ministers to "avoid waste" as they make their requests before the budget is presented to parliament in October.

Giorgetti said the situation was challenging but the government would "try" to meet its current commitments on deficit and debt reduction.