Italy faces confrontation with the EU: Despite warnings and resistance from Brussels, the populist government of Lega and the Five-Star Movement insists on its budget plans, which include a new debt of 2.4 percent. Among other things, she wants to finance the introduction of a basic income.
The EU urged to improve its draft budget, rejects Rome. The budget plan remains unchanged, said Deputy Prime Minister Luigi Di Maio on Tuesday evening. „We believe this is the budget that the country needs to get it going again,“ Di Maio said after a Cabinet meeting in Rome. Minister of Finance Giovanni Tria had timely sent the revised version of the budget accompanied by a letter to the Commission, reported the Italian news agency ANSA Wednesday morning.
For the first time in October, the European Commission rejected the draft budget of a member state. The Commission criticizes the fact that Italy’s new debt for 2019 is three times higher than that agreed by the previous government with Brussels. This had promised 0.8 percent. Rome is now threatened with an excessive deficit procedure that could lead to high fines or cuts in EU aid.
IMF puts pressure on Rome
The International Monetary Fund (IMF) also warned Italy against negative budgetary implications. The fund was a bad testimony to Italy’s economy on Tuesday. „Real personal income is at the level of two decades ago, unemployment is around ten percent over the period, and living conditions for middle-aged and younger generations have eroded,“ a report said. If Italy sticks to its plans, growth would only amount to one percent of gross domestic product (GDP) for the years 2018 to 2020, after which it would continue to fall.
The other countries of Europe had mostly been in the dispute before: the euro finance ministers, like Brussels, called for a new budget, in line with the euro stability pact. German Chancellor Angela Merkel said on Tuesday in a speech on the future of Europe in the European Parliament in Strasbourg: „Anyone who relies on solving problems solely through new debt, and ignores commitments made, will lay the foundations for the strength and stability of the euro Space in question „. She has the „sustained hope“ that a solution will be found in an interview with the European Commission.
Damage for Italy fears
Common sense must be stronger than whims, said European Parliament President Antonio Tajani. The „arrogance“ leads to defending an attitude that is „economically untenable“. Rome risked „enormous damage to the Italians in the coming years,“ the Italian continued.
Italy is the third largest economy in the Eurozone and is already heavily in debt. Their national debt amounts to 2.3 trillion euros, a good 130 percent of economic output. The coalition wants to implement electoral promises and stimulate growth, among other things with tax cuts and higher social spending, such as a basic security.
Waiting for reply
The government also wants to introduce mechanisms to control the deficit, it said Tuesday night. The deficit should not exceed the planned threshold of 2.4 percent. In addition, more properties are to be sold.
„We are working on a budget that will create more jobs, more pensions and less taxes, not for everyone, but for many. If we like Europe, we will be satisfied, if not, we will continue on our way, „said Interior Minister and Second Deputy Prime Minister Matteo Salvini of the right-wing populist Lega. There was no direct reaction from Brussels on Tuesday. On November 21, the EU Commission wants to give its opinion on all budget drafts.