Lagarde on Italy's budget request: 'We must stick to the rules'

European Central Bank President Christine Lagarde stressed the importance of adhering to EU fiscal rules, including those for deficit, debt, and budgets. Speaking on the Italian program "Che tempo che fa," she responded to a question about Italy's request to deviate from the Stability and Growth Pact to offset energy shock impacts.

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We must adhere to the rules of deficit, debt, budget, and operate within these rules.

Lagarde advocated for collective European action rather than individual country paths, warning that fragmentation would please adversaries. She recalled the unified European response during the COVID-19 pandemic, particularly the substantial Next Generation EU funds allocated to Italy, which was heavily impacted. "This is European action," she stated.

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It is important first of all to act together as Europeans rather than seeking different paths. Our enemies would be enthusiastic about fragmentation.

Addressing fiscal conditions, Lagarde asserted that European countries are not in a state of austerity, pointing to fiscal expansion in 2025 as an example. When asked about potential interest rate hikes at the upcoming monetary policy meeting, she stated, "You will know on June 11," declining to provide further guidance due to "maximum uncertainty."

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Look at Covid: suddenly we decided to collaborate all together, we decided that Italy, which had been hit more than any other country, received more funds. This is European action.

Lagarde also commented on growth forecasts, noting that the European Commission projects below 1% growth for all of Europe in 2026, specifically 0.9%, due to energy prices and significant uncertainty. This forecast was made in response to a question about Italy's stagnant growth estimate of 0.5%.

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If we look at the fiscal position of European countries, we are not in a state of absolute austerity. In 2025, for example, we had an expansion from a fiscal point of view.