MNI BRIEF: Market ESM Reaction Shows Tool Obsolete  Meloni

Limited market reaction to Italy's lower house refusing to ratify reform of the European Stability Mechanism shows that the instrument is “obsolete”, prime minister Giorgia Meloni told a press conference on Thursday.

“This is an opportunity to transform this instrument -- ESM -- in something more effective,” Meloni said, noting that her government would push in that direction and adding that the negative Italian reaction should not be read as linked to the reform of the European fiscal rules reform outcome. “I am satisfied with the new Stability and Growth Pact, but it is clearly not the pact I would like to have,” Meloni said, noting that as a result the government left the ESM decision to parliament.

Meloni said Italy’s growth will likely outperform the European average in 2024 and she expected the European Central Bank to lower lending rates this year. Meloni would prefer to reduce public spending over issuing more debt if the country faces budget constraints this year.