EU rejects Italy budget, sanctions may follow

734

European Commission takes first step towards disciplining Italy over its draft 2019 budget but defiant Rome says it had no intention of changing its plans and sanctions would be “disrespectful” towards Italians.

Italy's debt amounts to more than 130 percent of GDP, second only to Greece's in the bloc and way above the EU's limit of 60 percent.
Italy’s debt amounts to more than 130 percent of GDP, second only to Greece’s in the bloc and way above the EU’s limit of 60 percent. (Reuters)

Brussels officially rejected Italy’s big-spending budget on Wednesday, clearing the path for unprecedented sanctions and deepening a bitter row with Rome’s populist government.

“With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability,” European Commission Vice President Valdis Dombrovskis told a press conference in Brussels.

“We conclude that the opening of a debt-based excessive deficit procedure is… warranted,” he added, referring to the EU’s official process to punish member states for public over-spending.

Italy rejects negotiations

Italy’s Deputy Prime Minister Matteo Salvini, speaking after Brussels rejected Italy’s 2019 budget, said on Wednesday the government’s fiscal targets were valid and indicated he would not negotiate over them.

“We are convinced about the numbers in our budget. We will talk about it in a year’s time,” he told reporters.

TRT World‘s Mobin Nasir reports.

The EU executive on Wednesday took the first step towards disciplining Italy over the budget, backed by euro zone governments worried that Rome’s borrow-and-spend plans could trigger another debt crisis that would hurt them all.

Salvini said any EU sanctions against Rome would be “disrespectful” towards Italians.

Italy's Deputy Prime Minister Matteo Salvini says the government's fiscal targets were valid and indicated he would not negotiate over them.
Italy’s Deputy Prime Minister Matteo Salvini says the government’s fiscal targets were valid and indicated he would not negotiate over them. (Reuters Archive)

EU-Italy tussle over budget 

Rome has submitted to the European Union a 2019 budget based on a public deficit of 2.4 percent of gross domestic product in 2019 –– three times the target of the government’s centre-left predecessor –– and one of 2.1 percent in 2020.

But Brussels says this will only increase Italy’s overall debt, with the deficit hitting 2.9 percent of GDP in 2019 and 3.1 percent in 2020 –– breaching the EU’s 3.0 percent limit.

The EU says the government must do the sums again, but Rome insists it will not change and that the EU should instead adopt its expansionary stance.

Italy could face EU sanctions and fines if it does not change course, with the European Commission due to release a report on the country’s overall debt position later on Wednesday.

Italy’s debt amounts to more than 130 percent of GDP, second only to Greece’s in the bloc and way above the EU’s limit of 60 percent.

Source: TRTWorld and agencies
SHARE