BRUSSELS (Reuters) - Italy's structural budget deficit is on the rise, the European Commission forecast on Monday, moving in the opposite direction to that required under EU rules and likely putting Rome on a collision course with the EU's executive arm.
The structural deficit is the budget balance that excludes one-off items and the effects of the business cycle. Under EU law, it should diminish each year by at least 0.5 percent of GDP until balance or surplus.
But Italy's structural deficit will increase to 2.0 percent of GDP this year from 1.6 percent in 2016 and rise further to 2.5 percent in 2018, unless policies change, the Commission said in its forecasts issued three times a year.
Also Italy's public debt, which according to EU rules should be falling each year and in the case of Italy by more 3 percentage points of GDP a year, will actually increase this year to an all-time high of 133.3 percent of GDP from 132.8 percent last year and edge lower only marginally to 133.2 percent next year.
Reporting By Jan Strupczewski; editing by Philip Blenkinsop