Italy's audit court sounds alarm over growth

Calls for stimulus, warns little room for maneuver

Italy's audit court sounds alarm over growth

(By Gordon Sorlini) Rome, May 28 - The head of Italy's Audit Court on Tuesday said harsh austerity measures helped push Italy and Europe deeper into economic stagnation and called for more measures to stimulate growth to help lift the country out of recession. However, Luigi Giampaolino, the president of the court, also warned there was not much scope for reducing the tax burden pressure if Italy wants to respect its budget commitments to the EU. Speaking during the presentation of the Audit Court's 2013 report, which examines Italy's public finances, Giampaolino, said: ''The intensity of the austerity measures adopted by European countries was, itself, a major cause of the spiral towards recession''. However, he said, ''what Italy and Europe needs is stimulus aimed at more growth'', adding that the suspension of spending curbs was not going to kick-start the economy. Outlining the severity of the country's economic hardship, Giampaolino said that the nominal contraction of Italian gross domestic product (GDP) in the 2009-2013 period totalled more than 230 billion euros. The loss of GDP, the Audit Court chief said, has been ''translated into a drop in the overall tax take but not in a drop in the tax burden'' in the country. Italy, which is the eurozone's third-largest economy, failed to meet its balanced budget objective this year by 50 million euros, Giampaolino said during the presentation. The message was that there are no easy solutions to the country's economic troubles, especially as the country's tax burden - one of the highest in the EU - is unlikely to come down soon. Reducing the tax burden ''is not easy to combine with the respect of European objectives,'' Giampaolino said. He also said the idea of finding money for cutting taxes through rationalizing public expenditures was an ''illusion.'' Giampaolino added, however, that he saw signs Premier Enrico Letta's new government was attempting to break with the previous government's heavy reliance on tax increases in order to meet budgetary targets agreed with the EU. During the presentation of the public finances report he said: ''The passage to the new parliamentary term seems to mark a first attempt to operate in discontinuity with budget policies which - starting from the summer of 2011 - had to rely on significant tax increases, despite the serious recessionary conditions the economy was going through''.

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