MEP: Italy’s post-RRF spending cuts set dangerous precedent for EU funding

A draft Italian government’s decision that would leverage resources received under the EU Recovery and Resilience Facility (RRF) to cut public spending risks setting a dangerous precedent for future joint EU public funding, Italian MEP Rosa D’Amato from the Greens and the European Free Alliance group told Euractiv. 

She warned that the decision signed by Italy’s ministers for the economy and for internal affairs, Giancarlo Giorgetti and Matteo Piantedosi—setting out budget cuts to municipalities and regions—would hit local authorities that were among the primary recipients of the post-pandemic RRF funds the hardest, affecting in particular southern regions. 

The funding cuts, which would be part of the Meloni government’s upcoming spending review, would imply cuts of €1.25 billion from 2024 to 2028 – split into a 50% reduction from current expenditure and another 50% based on “the contributions allocated to each authority from the RRF resources”.  

In a letter sent to the European Commissioner for the Economy Paolo Gentiloni on Wednesday (29 May) and seen by Euractiv, the Green MEP requested a formal assessment of the measure to assess whether it breaches RRF objectives.

She said the move would breach the principle of additionality, enshrined in Article 5 of the country’s 2021 measure implementing the RRF—according to which “support under the facility does not replace budgetary expenditure and respects the principle of additionality.” 

The RRF funding in question amounted to €6.1 billion and covered public nurseries and kindergartens as well as urban development projects. 

“From the very beginning, municipalities have warned the government of the risk of making investments such as in kindergartens and then being left without the current expenditure transfer needed to hire, for example, kindergarten teachers”, Marco Leonardi, professor of economics at the University of Milan, told Euractiv.  

According to Leonardi, the cut set out under the draft decree, which is based on RRF disbursements, “is just the opposite of what needs to be done” and an “incredible denial of the basic principle of the National Recovery and Resilience Plan (NRP)”—the national transposition of the RRF programme. 

‘Protect cohesion policy’ from centralisation trend

While the decree has been criticised by Minister for European Affairs Raffaele Fitto and local governments and opposition parties, D’Amato warned that it would carry significance beyond the perimeters of the RRF. 

Coming at a time of growing momentum among Brussels legislators to extend the same reform-based structure of the RRF to EU cohesion funds—which represent about one-third of the bloc’s regular budget—the measure could set a precedent with far-reaching ramifications. 

Until now, cohesion funds have been managed under a direct relationship between the European Commission and local authorities, in contrast to the RRF, where the EU executive deals only with central governments.

D’Amato told Euractiv she is “particularly opposed to changing the rules of cohesion policy to make them similar to those of the RRF” as she warned that, if extended to other EU funds, the set up of the RRF would further centralise the political clout of national governments. 

She said it is necessary to protect the regions’ role from the decision-making power of central governments, “cohesion policy from attempts to make it a kind of national seven-year Recovery and Resilience plan.” 

The Greens politician argued there is “strong pressure” from member states to turn regional policy “into an ‘a’ la carte policy with no territorial constraints; no partnership agreements; no focus on small and medium-sized enterprises.” 

Safeguarding the ‘No harm to cohesion’ principle

She added that the national plan based on the RFF does not envision monitoring the real territorial impact of the investments made.

“That is why I am in favour of protecting the rationale of regional policy”, said D’Amato,  is “the only real redistributive policy between centre and periphery, urban and rural areas, rich and performing regions and regions in difficulty”. 

Among the key safeguards of the additionality principle, D’Amato stressed the rule of ‘not harm to cohesion’ laid out by the Commission in 2022 and approved by co-legislators and the Committee of the Regions in 2023.

The measure mandates that EU policies be complementary and consistent with cohesion policy and, in particular, include more territorial impact assessments and ‘rural proofing’ strategies for any new EU-level policy. 

According to D’Amato, country-specific recommendations tied to the disbursement of EU funds should set measurable and binding targets on social objectives at territorial level, aiming at reducing socioeconomic inequalities and align with sustainable development goals.   

The Commission should be able to intervene “if the action of the member states risks frustrating the use of considerable resources paid for by European taxpayers”, she said.

[Edited by Anna Brunetti/Alice Taylor]

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