Italy’s contentious plan to boost spending in order to spur economic growth – a plan backed by the populist government – has been criticised by the country’s central bank governor.
“The growth divide between Italy and the rest of the euro area is a structural problem that can’t be solved by monetary stabilization policies or by expanding the government’s budget,” Bank of Italy Governor Ignazio Visco said in Rome.
But Finance Minister Giovanni Tria, who was also at the event, retorted that the spending plans are aimed at reducing that gap.
As reported by Bloomberg, the direct attack on the key tenets of the government’s policy comes amid growing signs of the economy’s difficulties. Growth unexpectedly stalled in the third quarter and unemployment jumped back above 10% in September, leaving it 2 percentage points above the euro-area average.
Tria insisted that fiscal stimulus is necessary to get the economy moving again. “Economically and socially, we cannot afford the cost of a no-deficit policy,” he said. “We are convinced that the budget law deficit level is not only sustainable, but also responsible.”
In response, Deputy Premier Luigi Di Maio from the Five Star Movement said: “I am sure the debt will fall, because we are spending more on investment, above all on investment in human capital”.
