EU to ease deficit rules to allow some investments: Barroso

The European Union will temporarily ease its deficit rules to enable member states to finance public investment programmes aimed at boosting growth, European Commission President Jose Manuel Barroso announced on Wednesday.

The decision comes amid a wider debate over the austerity-driven policies used to tackle the EU’s economic crisis, as the worst-affected countries and left-wing parties argue that austerity is throttling growth and failing to tackle soaring unemployment.

The EU’s executive would consider allowing “temporary deviations from the structural deficit path” in 2013 and 2014, for member states to invest in programmes “with a proven impact on the sustainability of public finances,” Barroso told the European Parliament.

The extra spending had to be on infrastructure projects co-funded by the EU, with a “positive, direct and verifiable long-term budgetary effect,” he said.

Italy, which has been pushing hard for a relaxation of EU budget rules, immediately hailed the decision as an “important” victory.

“The Italian government accepts with great satisfaction an important result, maybe the most important of all in its relations with European institutions,” read a statement from the office of Italian Prime Minister Enrico Letta.

“This is the prize for the wager that this government took from the start on complying with the public financing objectives,” the statement added.

Letta, who became premier in April, made it a priority to restart Italy’s sputtering growth engine and tackle unemployment following the tough austerity policies of his predecessor Mario Monti, while pledging to keep the deficit below the EU-mandated 3 per cent.

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