Meloni implores von der Leyen to let countries overspend to battle energy crunch

Italian Prime Minister Giorgia Meloni wants the European Commission to relax its fiscal rules to allow countries to better help firms and families deal with rising prices, driven by a crunch in energy supply.

Speaking at a media event on Wednesday, Meloni said she is writing to Commission President Ursula von der Leyen about the issue and wants it discussed at upcoming Ecofin and European Council meetings.

“We believe that, in the face of rising inflation caused by high global energy prices, it is necessary to grant member states additional flexibility to support households and businesses,” she said.

European countries are struggling with higher energy costs driven by the war in Iran, and fear that increased costs will put delicate growth at risk and stoke inflation.

In September, inflation increased at a faster pace across the major eurozone economies. And in Italy, it jumped from 3.2% to 4.1%, according to the Italian Institute of Statistics’ preliminary data.

“I am writing to President von der Leyen to ensure that the issue is addressed at the Ecofin meeting to be held next week in Luxembourg, and then, of course, at the next European Council, which is in two weeks,” Meloni said.

Gasoline prices have been the biggest political issue in Italy for weeks, putting the government in trouble. Political parties are already getting on a campaign footing ahead of a national election next year.

Italy’s government overspends its income by the equivalent of more than 3% of its GDP, breaching EU fiscal targets. Meloni’s government plans to meet the 3% target next year, after failing to do so this year.

Several other countries also run above or close to the 3% threshold and Meloni may find she has allies in the European Council in her fight for more flexibility.

Greece’s Prime Minister Kyriakos Mitsotakis also wrote to von der Leyen, Council President António Costa and Eurogroup President Kyriakos Pierrakakis on Wednesday, slamming a request for countries to use less energy and instead calling for more fiscal space.

“We have already raised the issue at the Ecofin meeting regarding the need to take into account the higher inflation recorded during this period when calculating the European targets that must be met and the permitted deficit,” Meloni said.

Joe Stanley-Smith contributed to this report.