The European Commission has declared a negative opinion on the draft 2019 Italian budget deficit, giving the country three weeks to rewrite its plan.
The College of Commissioners issued its verdict on the 2019 Italian budget deficit on Tuesday, in a move described as unprecedented but not unexpected.
The draft budget, based on forecasts that have been described by critics as “optimistic”, aims to deliver on campaign promises made by both parties of Italy’s ruling coalition, cutting taxes, increasing welfare for the poor and unemployed; and establishing a universal basic income scheme.
European Commission Vice President Valdis Dombrovskis told a press conference: “It is tempting to cure debt with more debt … but [the 2019 Italian budget deficit] would not be fair for the younger generation … keeping sound fiscal policy and confidence is crucial.”
The proposed 2019 Italian budget deficit, comprising 2.4% of gross domestic product, exceeds the EU’s deficit target of 2%. Economy minister Giovanni Tria said in a letter to the European Commission on Monday that despite taking the “hard but necessary” decision to exceed the deficit quota, Rome did not plan to increase its deficit any further in 2020 and 2021 and would begin taking measures to reduce the deficit from 2022. Tria went on to say he hoped a “constructive dialogue” between Rome and Brussels could be reached; and that Italy’s place was in the Eurozone.
Italian Prime Minister Giuseppe Conte told reporters on Monday Italy would not leave the European Union or the Eurozone. If the Commission rejected the 2019 Italian budget deficit, he said, “we’d sit down around the table and talk, just like any family would do.”
Olaf Scholz, Germany’s Finance Minister, said on Monday: “Actually, it’s pretty simple: Someone with a lot of debt has to be more careful when taking on new debt than someone who has little debt.”
Prominent white nationalist Steve Bannon told an Italian newspaper that joint Deputy Prime Ministers Matteo Salvini and Luigi Di Maio had “clear ideas on the economy.”
Commissioner Pierre Moscovici, who has exchanged words with Salvini before, said the situation was unsurprising as the 2019 Italian budget deficit “represents a clear and intentional deviation from the commitments made by Italy last July.”