mE WALL STREET JOURNAL
Ufficio Stampa
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Inside
Economy Minister Eim:
Carlc Padoan on ltaly's
' upside surprises'
Interview ..•.. .... .. .. ... S
Italian Economie Chief
Urges Patience on Steps
Crawling Back
The eurozone and its largest member nations have struggled
to rebound from the economie downturn that began in 2008.
Change since peak in inflation-adjusted GDP
-
4%
Germany
2
o .---~~~~~~~::::::;;;;~;;;~~::::::: France
-2
Eurozone
-4
-6
Spain
-8
-10• I I
2008
I
I
'09
I
I
I
I
'10
•
t
I
I
'11
I
I
I
I
'12
Sources: Eurostat; Germany's st atistica! agency
BY GIADA ZAMPANO
AND DEBORAH BALL
ROME-Italy's Economy Minister
Pier ~ Padoan rebuffed criticism
that the country is moving too
slowly in liberalizing its economy
and keeping its deficit under control, stressing that a mix of economie overhauls and budget measures recently unveiled by Rome
could help boost growth by 2015.
Mr. f.adQ.an said the reform
agenda of Prime Minister Matteo
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The Wal l St reet Journal
Renzi may take up to two years to
bear its first, visible fruits. But he
also expressed confidence that
moves to revamp Italy's labor regulations, cut taxes and overhaul other
aspects of the economy-paired
with budget measures aimed at cutting labor taxes and boosting household income-have the potential to
jump-start Italy's struggling economy.
"Structural reforms begin to
have an impact immediately, but
take time to bear fruit,'' Mr. ffill.mw
Intervista a Pier Carlo Padoan - Il Ministro
dell'economia italiano esorta ad essere pazienti
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said in an interview. However, the
government's 0.6% growth forecast
for 2015 "is a baseline measure,'' he
said. "There could be upside surprises."
Mr. Renzi's government unveiled
last week an expansive budget law,
A Gumt ~ Welcome
Ufficio Stampa
including cuts to labor taxes and
personal income taxes valued at €18
billion ($23 billion), in an attempt
to revive the country's depressed
economy. The move, partially
funded with additional borrowing, is
expected to push Italy's closely
watched public deficit to 2.9% of
gross domestic product in 2015close to the European Union target
of 3%-putting Rome on a collision
course with Brussels.
Mr. Padoan defended the budget
measures, saying they target growth
without veering from the path of
fiscal consolidation.
"I think the combination of all
these measures has quite well the
potential to kick-start Italy's economy again. In that case, numbers
could be even higher," he said, referring to the government's growth
forecasts. Mr. Padoan added he was
confident that the open dialogue
with his European counterparts
would ensure a smooth approval of
the budget law by the European
Commission.
Italy has found an ally in France,
which has also announced a largerthan-expected deficit. The two countries are both struggling with stag-
THEWALLSTREETJOURNAL
nant business activity and high
unemployment and are reluctant to
impose new austerity measures on
their weak economies. The European Commission, the EU's executive arm, is expected to challenge
both countries for the lack of ambitious belt-tightening in their budgets.
The possible conflict is highlighting growing divisions in Europe
over the right economie response to
help reverse the slowdown that
threatens the 18-members eurozone,
which is on the verge of its third recession since 2008.
Leaders across Europe and elsewhere have been calling for Germany to boost public spending in
response. But Berlin is sticking to
the view that Europe's sluggish
growth results from a lack of sufficient economie overhauls in struggling countries, especially France
and Italy.
Mr. ~ on Monday rejected
the idea that Rome and Paris are
joining forces against Berlin, and
called for a united response to the
crisis focusing on boosting growth
and jobs creation.
"Frankly I don't see any alliance
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against anybody. There is a joint alliance in Europe against unemployment," he said.
The Italian minister also insisted
that "there is no plan B" for Italy or
for all of Europe, apart from pushing forward with an agenda that
aims at removing hurdles to investment and improving competitiveness. But he stressed that the same
recipe has to be applied equally
across the eurozone, "not just in
some countries."
Mr. eadllwJ. reiterated his support for the actions of the European
Central Bank, which has insisted
that countries need to do their part
by implementing reforms at home,
while announcing measures aimed
at providing new stimulus to revive
growth in the eurozone. ECB President Mario Draghi announced
moves to counter deflation risks in
June and September, including cuts
in interest rates to record lows and
new bank-lending and asset-purchase plans.
"The ECB is already doing a lot,"
Mr. eadllwJ. said. "It is right to ask
for structural reforms. They will allow monetary policy to work better."
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Mr. Ead.Qaa, shown here in Rome in June, rebuffed criticism that ltaly isn't liberalizing its economy quickly enough.
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