IMF’s Thomsen: Very important that Italy has a 2019 budget that is in line with the EU rules

Poul Thomsen, Director of the European Department at the International Monetary Fund, was out on the wires in the last minute, saying that quite a few countries in Europe still need fiscal consolidation but too many are not doing so.

Key quotes:

   •  Fiscal policy has been insufficiently countercyclical in Europe. 
   •  Highly indebted countries inside the Euro-zone are a particular concern. 
   •  Fiscal policy in Spain needs to be more countercyclical.
   •  Italy should have undertaken more structure fiscal adjustment in the last few years. 
   •  This is time to increase fiscal space; Italy is most constrained in that respect.
   •  We do project relatively strong growth in Italy next year. 
   •  However, this must not be the time to relax fiscal policy in Italy.
   •  Very important that Italy has a 2019 budget that is in line with the EU rules.
   •  The direct impact of US car tariffs on Europe would be relatively limited. 
   •  But this could affect investor sentiment negatively.