Finance

Italy refuses to bow to Brussels budget demands

The Italian government put the ball back in the European Commissions court by deciding not to change its budgetary targets despite the possibility of the EUs sanctions action against it.

Late Tuesday evening, Finance Minister Giovanni Tria sent Economic Affairs Commissioner Pierre Moscovici and Vice President Valdis Dombrovskis the long-awaited reply to their letter asking the Italian government to rework its draft budget plan, which flouts the countrys previous commitments under the EUs fiscal rules.

The Italian government did make a small concession by including so-called safeguard clauses that would be automatically triggered to avoid the deficit-to-GDP ratio climbing above 2.4 percent in 2019 and to sell some real estate properties belonging to the state, according to statements made by 5Stars leader and Deputy Prime Minister Luigi Di Maio after Tuesday nights cabinet meeting.

On his way out from Prime Minister Giuseppe Contes office, he said: “We wont go over 2.4 percent deficit, and we believe in 1.5 percent economic growth next year.”

“If Brussels like our plan were happy; if not, we press forward,” added the Leagues Matteo Salvini, Italys other deputy prime minister.

The Italian governments deadline for sending a reply to the Commission was before midnight Wednesday. So far, its official response has not been published.

Earlier on Tuesday, Tria issued a statement saying, “the growth rate isnt negotiable as the forecasts are exclusively technical.”

In response to Romes defiant stance, the Commission could launch the so-called “excessive deficit procedure” (EDP) against Italy as early as November 21.

The EDP could result in strict economic demands on offending countries to bring their budget deficit and national debt back in line with EU standards. If ignored, the Commission can consider financial penalties of up to 0.5 percent of GDP — or about €9 billion in Italys case.

Correction: An earlier version misstated the deadline for Italys reply to the Commission.

Original Article