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ROME, Nov. 29 (Reuters) – Italy's increase in budget spending will not automatically translate into increased growth, said Francois Villeroy de Galhau, a member of the board of governors of the European Central Bank, on Thursday ( ECB).
"If deficits and public debt were the key to growth, our two countries (France and Italy, ed) would be the champions in Europe," said the governor of the Bank of France in a speech in Rome.
"This is unfortunately not the case. In the short term, it is not certain that an increased deficit, if combined with an increased risk premium on interest rates, has a positive effect on growth. "
Italy is engaged in a standoff with Brussels around its 2019 budget, which, according to the European Commission, violates EU rules.
A new stage has been crossed for the formal opening of a disciplinary procedure against Italy for excessive deficit, was learned Thursday from European sources.
"In the longer term, no country can let its public debt ever increase," said François Villeroy de Galhau.
"Beyond the risk of insolvency, there is a question of equity: it is a burden that is passed on to future generations." (Gavin Jones, Patrick Vignal for French service)
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