How Italy got in (and out of) the debt trap

This week the European Commission let Italy off the hook, granting the country extra flexibility – to the tune of 14 billion euros – in its debt reduction targets for 2016.

The extra “flexibility” includes allowances for investments (0.25 per cent of GDP), for the refugees crisis (0.04 per cent of GDP) and for extra security measures (0.06 per cent of GDP). In return the Commission wants a ‘clear and credible commitment’ from Italy that the country will respect its budget targets in 2017.