The European Commission's analysis of the sustainability1 of the economies in the Euro Area looks at the risk of Italy falling below the Euro Area average and the EU-27 in the short, medium and long term2.
According to the Commission's analysis, Italy's public debt is among the most sustainable in Europe over the long term. The S2 indicator (long term) is equal to -2.1 against an EU average of 1.7 and a Euro Area average of 0.8 3.
- Sustainability is defined as the difference between the structural budget position and the sustainable budget position.
- The analysis referenced in the graph regards 17 countries, considering the previous entry of Latvia and Lithuania in the EU.
- In order to interpret the indicator correctly, it is worth noting that as its value increases, the fiscal adjustment needed to reduce sustainability risk also increases. A negative S2 value, as in Italy's case, indicates sustainability of the public finances in given scenarios, without further adjustments. The short and medium-term sustainability indicators also place Italy among the countries with the most sustainable public finances.
The European Commission analysis of the sustainability of the public finances of the Member States in the European Monetary Union has confirmed that Italyâs risk level is below the Euro Area and EU averages in the short, medium and long term (Croatia, which joined the EMU on 1 July 2013, is not considered in the analysis).
Source: Report on Public finances in EMU 2013