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.
• 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.
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