LONDON (Reuters) - Italy’s new government must “stay the course” in controlling debt and avoid raising wrong expectations in markets, the European Union’s executive said on Thursday.
No party or bloc won an absolute majority in Sunday’s national election, leaving the country mired in political uncertainty as EU authorities said urgent action was needed to put its teetering economy back on an even keel.
Valdis Dombrovskis, a European Commission vice president whose responsibilities include the euro, said Brussels has been “very clear” on what its expectations for Italy to meet its budget deficit targets.
“Especially for Italy, a country that has the second highest debt-to-GDP ratio after Greece in the EU, it’s important to stay on course as regards responsible fiscal policies,” Dombrovskis told a news conference.
“Market discipline also may play a role here, but it’s important of course not to create any adverse expectations for the market, and that’s why the signaling of staying on course as regards to fiscal policy is also important,” he said.
Reporting by Huw Jones, editing by Jan Strupczewski