Italy’s Meloni suggests pausing EU spending rules over Iran war

“If the Middle East crisis were to experience a new escalation, we should seriously consider the issue of a European response not dissimilar in the approach and tools to that deployed in response to the (Covid) pandemic,” she told parliament.

“In that case, we believe it should not be taboo to discuss a possible temporary suspension of the Stability and Growth Pact. Not a waiver for individual member states, but a generalised measure.”

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EU members are bound by spending rules obliging them to keep the public deficit below three percent of economic output and debt at 60 percent of GDP.

But the EU can suspend the rules in exceptional circumstances and crises, as it did during the coronavirus pandemic when states had to prop up their embattled economies.

“The condition for activating the general escape clause is to have a severe economic downturn in euro area or the European Union as a whole,” EU economy chief Valdis Dombrovskis told European lawmakers in Brussels.

“We are currently not in this scenario,” he said.

EU rules already allowed member states for some “fiscal leeway” to cushion negative impacts on the economy, he added.

Italy narrowly missed bringing its deficit below the three percent target in 2025, with its deficit at 3.1 percent.

Meloni’s government has temporarily cut fuel excise taxes in the face of rising energy prices following war between the United States and Israel, and Iran.

But she said it remained ready to go further.

“Faced with the risk of the most severe energy shock we’ve seen in recent memory, the possibility of further price increases for energy, fuel, and consumer goods, and the risk of seeing entire supply chains interrupted and our economy stalled, it’s the prime minister’s precise duty to do everything possible” to keep prices low, she said.

Meloni recently visited Saudi Arabia, the United Arab Emirates and Qatar to try to secure energy supplies for Italy from a region that she said provides around 15 percent of her country’s needs.