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EU sees Germany keeping budget surplus, Italy's debt to shoot up

07 November 2019 23:51 (UTC +04:00)

The eurozone will restrain spending under draft budget plans submitted by the bloc’s governments, the European Commission forecast on Thursday, despite calls to counter a worsening economic slowdown, APA reports citing Reuters.

In its quarterly economic forecasts, Brussels said Germany, the largest economy in the 19-country bloc, would keep a budget surplus at least until 2021, although the surplus would narrow.

High-debt countries would keep spending, despite recommendations for thriftiness. France’s deficit would be above the EU ceiling this year and Italy’s debt would grow to nearly 140% of output, the Commission predicted.

Despite a worsening growth outlook, Germany is set to maintain a large budget surplus this year at 1.2% of its gross domestic product (GDP). The surplus will narrow to 0.6% of GDP next year, and 0.2% in 2021, the Commission forecast.

The Netherlands, another eurozone state that could spend more, is set for a surplus of 1.5% of output this year, 0.5% next and 0.4% in 2021.

EU economics commissioner Pierre Moscovici praised the reduction of budget surpluses but said more could be done.

With economies weakening, he said it was probably time to change tack in the bloc’s fiscal policy, which has so far focused on cutting deficits instead of boosting growth.

“When it starts to get cold, it is perhaps the moment to turn up the heating,” Moscovici told a news conference.