EU presses Italy to act against tax evasion
(BRUSSELS) - Italy has launched a "bold" strategy to clean up its public finances but the country must do more to combat tax evasion and black market labour, the European Commission said Wednesday.
Rome still faces "important and serious challenges" despite austerity measures taken by Prime Minister Mario Monti's government to cut a huge debt burden, the commission said as it released report cards for all 27 EU states.
"In the past few months, the policy response to ensure sound public finances and tackle Italy's long-standing structural weaknesses has been determined and wide-ranging," the report said.
"The full implementation of the bold fiscal consolidation strategy is a pressing need," it said in a report warning of serious macro-economic imbalances in the third biggest eurozone economy after Germany and France.
"The business environment is not growth-friendly due to administrative inefficiencies, burdensome regulations and significant weaknesses in the civil justice system," it said.
Employment rates are low among young people, women and older workers and "further determined action" is needed to ensure that people pay their taxes, the commission said.
The EU's executive arm also pointed to a persistent economic gap between southern Italy and richer regions in the north, stressing that it remains an "overarching concern."
Italy faced new market pressure on Wednesday and had to pay sharply higher rates to borrow 5.74 billion euros ($7.16 billion) in medium and long term debt amid growing concerns about the fiscal health of southern neighbour Spain.
Monti's technocratic government was able to calm the markets by launching budget cuts and economic reforms after taking power from Silvio Berlusconi late last year.
2012 country-specific recommendations in the context of the European Semester - guide
Conclusion of 12 in-depth reviews - correcting macroeconomic imbalances
Excessive Deficit Procedure recommendations on Bulgaria, Germany and Hungary - guide