Gentiloni: “We are asking for more details of the tax reform, but we do not live on the moon, we know that there is an internal political negotiation” | Economy | EUROtoday

The flood from two weeks in the past in Valencia remains to be current in Brussels. Also within the financial forecasts introduced this Friday by the Commissioner for Economy and Finance, Paolo Gentiloni (Rome, 69 years previous). There are a number of references within the doc, although the injury got here when the European Commission technicians have been finalizing their calculations. Before speaking about its influence on exercise, he emphasizes that “it is difficult to talk about the economic consequences of such a tragedy.” But it must be accomplished, he says in an interview with 4 worldwide media, together with EL PAÍS. “In the last two or three years we have had this type of situation every two or three months, of course not with the tragic number of victims in Valencia. But there were from Portugal to Italy, from Slovenia to Greece, in Central Europe, in Germany. It has become a permanent problem.”

This string of pure disasters “has two consequences for the Commission”: “strengthening the Solidarity Fund”, a monetary mechanism of the EU price range from which tons of of hundreds of thousands have gone lately to a number of of those States. “And, on the other hand, that related to fiscal rules, which excludes these extraordinary expenses from the 3% deficit limit. “We are talking about this with the Spanish authorities, who must quantify the damage and the expenditure is deducted from the deficit path.”

Gentiloni factors out that these pure disasters don’t often have a detrimental influence on the GDP as a complete, “but of course there is an immediate impact on economic activity and potentially on inflation.” “We should not underestimate the negative impacts.” And he points a warning that lately, with the latest victory of Donald Trump and his return to the White House, appears to have a transparent recipient: “If the world underestimates climate change, and there is a danger of this happening in the coming years , the costs that we will have to face due to this underestimation will grow very seriously.”

One of the final duties that Gentiloni is dealing with is the negotiation with the Spanish Government for the tax reform, which is a part of the commitments to be fulfilled to obtain the 7,200 million that correspond to the fifth cost of the Recovery plan and the fiscal adjustment plan for the subsequent seven years (2025-2031). For months, Pedro Sánchez’s Executive has resisted doing something greater than what has already been accomplished (tax on electrical energy firms and banks, or not deflating the private earnings tax fee). But that was not sufficient in Brussels. In the tip Madrid agreed to take extra steps. But the fiscal plan introduced a number of weeks in the past doesn’t give many particulars. Are they asking for extra? “Of course we are asking for more details about the tax reform, but, of course, we do not live on the moon, we know that it is part of a political negotiation. We are in close contact with the Spanish authorities. But we do not want to break into the internal negotiation on tax reform, which is very important. “I am very optimistic,” he responds with a combination of demand and understanding of the issues of the coalition Executive to construct parliamentary majorities.

Perhaps for that reason, now so widespread within the EU, – and due to the open negotiations – he’s understanding of the progressive Government’s issues in finalizing budgets. “I believe that the Spanish authorities prefer, and rightly so, to send us a budget [nuevo]not one without changes. They are in it. I also have to say that what happened two weeks ago made all of this more complicated, which is why they are not only working on the draft budget, but also on redesigning it after the Valencia floods.” “I am optimistic,” he reiterates.

That optimistic character reappears in a part of his evaluation of the forecasts ready by his division: “If we analyze the latest forecasts and go back to the end of 2022 and beginning of 2023, the perspective was recession. In 2023, we had zero growth. So the angle is positive, despite the very slow pace, growth is back in Europe with high employment and inflation coming down.” Although not every part can appear like that. And this begins with the primary European economic system: “From Germany, the reading is worse. It weighs on 30% of the euro zone economy and that affects everyone. Except for Spain, other countries do not have a satisfactory level of growth either. If I talk about Germany it is because it is reflecting problems that are European more than other countries. “The need to increase defense spending, the threats to world trade or the rising cost of energy are not German things, they are European.”

One of the elements that sustains the European economy is public investment, something linked to the Recovery Fund. But this plan has an expiration date in 2026. And after? “I believe that we will find ways to go beyond 2026 in the financing of common public goods such as Defense. But the prospect of increasing the level of growth in Europe is more linked to the ability to multiply and attract private investments, and to the propensity of consumers. I always look at the level of savings and it is very high. In theory, when purchasing power recovers from high inflation, the level of savings should fall. And it is not doing it, especially in Germany.”