(ANSA) - Rome, June 1 - Italian growth surged much more than
reviously reported in the first quarter, ISTAT said Thursday as
Economy Minister Pier Carlo Padoan asked the European Union for
a substantial discount in next year's budget-to-GDP ratio.
Meanwhile Padoan reached a provisional deal with EU
authorities on the restructuring of troubled Tuscan lender Monte
dei Paschi di Siena (MPS), Italy's third-biggest and the world's
oldest bank.
ISTAT on Thursday revised sharply upwards its first-quarter
growth estimates from 0.2% to 0.4% over the previous quarter and
from 0.8% to 1.2% on the same quarter of 2016, the statistics
agency said.
ISTAT said the surprise revision was due to a
better-than-expected performance by the service sector.
Italy's estimated 1.2% GDP growth in the first quarter of
the year is the highest since the fourth quarter of 2010, ISTAT
said.
Italy's acquired GDP growth for 2017 is already 0.9%, ISTAT
said, revising upwards its estimate from 0.6%.
Italy's revised 0.4% quarterly GDP growth and 1.2%
year-on-year growth takes it off the bottom of the European
growth table.
Germany is top with 0.6% and 2.9% respectively but France is
like Italy in quarter-on-quarter terms (0.4) but worse on an
annual basis, 1.0%.
But Italy remains below the eurozone average of 0.5% and
1.7%.
Premier Paolo Gentiloni reacted to the better-than-expected
growth figures by tweeting: "estimates for 2017 revised upwards.
Italy is growing more than expected and the hard work is
continuing".
The latest better-than-expected growth figures are good but
"not enough", former premier Matteo Renzi said.
The Democratic Party (PD) leader said the figures "are the
result of years of serious and rigorous work we now have behind
us.
"But I'm not satisfied because I know it's not enough.
"The only road is AHEAD, continuing to lower taxes,
simplifying the system and encouraging the country's real
entrepreneurs".
Organisation for Economic Cooperation and Development
Secretary-General Angel Gurria replied to an ANSA question on
the better-than-expected Italian growth figures by saying it was
"very good news".
He said "Italy has emerged from negative numbers and has now
entered on a growth path", adding that now it is more than ever
necessary to resolve the fragilities of the Italian banking
system.
Also on Thursday, Economy Minister Pier Carlo Padoan asked
the EU for a nine-billion-euro discount on Italy's budget for
2018, ANSA has calculated.
This is the amount resulting from a reduction from 0.8% to
0.3% in the deficit cut next year.
As a result, only six billion more would be enough to avert
an automatic 25% hike in VAT as part of the so-called 'safeguard
clauses" currently envisaged, several sources told ANSA.
Padoan wrote to the European Commission Thursday outlining a
0.3% structural deficit cut, instead of the 0.8% originally
requested, and the stabilisation of the debt/GDP ratio in 2018,
sources said.
He was communicating "the scope of the adjustment deemed
adequate in light of the public finances of our country, also in
light of the reform effort that has been continuing
uninterrupted for several years".
An EC spokesman said it had received Padoan's letter replying
to last week's recommendations but had no comment to make.
The European Commission will use its "margin of appreciation"
on Padoan's requested 0.3% cut in the budget deficit next year,
Economic and Financial Affairs Commissioner Piere Moscovici
said.
He said the EC would reply to the request "at the opportune
moment".
Moscovi said the EC was "at Italy's side and would assess the
budget situation in light of the new growth figures.
Padoan and European Commission Vice President Valdis
Dombrovskis spoke of the Monte dei Paschi di Siena bank
restructuring provisional deal and Italy's 2018 budget plans on
the sidelines of the Brussels Economic Forum Thursday.
"Happy to meet Pier Carlo Padoan on the margins of the
Brussels Economic Forum. We welcomed the in-principle accord on
MPS and discussed the preparation of the 2018 budget," tweeted
Dombrovskis.
European Competition Commissioner Margrethe Vestager on
Thursday reached an in-principle deal with Padoan on a
restructuring plan for struggling MPS, to permit a precautionary
recapitalisation of the Tuscan lender in line with EU rules, the
European Commission said.
Also in line with EU rules, some of the costs of
restructuring MPS will be borne by shareholders and junior
bondholders, the EC said.
Retail bondholders may request compensation in case of
misselling, it said, while deposit holder are protected.
Monte dei Paschi di Siena will have its entire portfolio of
non-performing loans at market conditions, reducing risks to
finances, the Commission said.
At the same time, MPS will take a series of measures to
substantially boost its efficiency including a ceiling on
managers' salaries, equal to 10 times the average salary of MPS
staff, the EC said.
The in-principle deal reached on MPS between the EU and the
Italian Treasury depends on the European Central Bank's (ECB)
confirmation that MPS is a solvent bank which respects capital
requisites, as well as Italy's obtaining a formal confirmation
from private investors that they will take on its portfolio of
non-performing loans, the Commission said.
Now the EC and the Italian authorities must define the
details of MPS's final restructuring plan, including Italy's
commitments on implementing the plan. ON this basis, Brussels
will adopt a formal decision in line with EU rules on State aid,
the EC said.
The EC said the preliminary and provisional deal was reached
thanks to "constructive talks with Italy".
Sources in Brussels said that "the financial projections and
cost control were the two main talking points" but "all the
chapters" in the negotiations "have been closed".
As for selling the non-performing loans, the sources said
there is already a "high level of tranquility" on the prospect
of private investors buying the NPL portfolio, but that in any
case the EU prefers to wait for the formalisation of that
purchase.
In other news, Open Society Foundations chief George
Soro, the Hungarian-American financier, told the Brussels
Economic Forum that Italy's banking and migratory crises are
today "the most dangerous threat" to the European Union.
The EU, he said, is going through an "existential
crisis", but the recent victories of pro-EU candidates in the
Dutch and French elections have given it fresh "impetus".
Now the EU must be "saved" and "reinvented radically", said
Soros.
Q1 GDP up 0.4% on quarter, 1.2% on year (4)
Provisional EU deal on MPS reached