The Italian Treasury has told the European Commission that it will be sticking to its budget plans, in spite of the criticism from continental leaders.
Last week, the Government of Italy submitted their budget plans for 2019 – setting an ambitious target for the reduction of their budget deficit. In response, the EU Commission said Rome’s proposal was “unprecedented in the history” of the EU. It is suggested that on Tuesday, the Commission will ask Italy to revise the proposal it outlined last week. Nonetheless, in an act of defiance, the Italians are expected to resist making concessions.
Italy’s government refuses to back down on its budget targets in its reply to European Union criticism of its 2019 spending plans https://t.co/M36pmiJdtT
— Bloomberg (@business) October 22, 2018
Since 2013, the year that the EU commission assumed control of member’s states budgetary plans, no nation has ever been asked to submit a revised budget. Therefore, the events have attracted attention for another point of conflict between a member state and the central authority.
Currently, Italy has 2.3 trillion euros in public debt – leading to fears that it is economically vulnerable and a potential source of contagion for other struggling European countries. The country’s debt, as a proportion of economic output, is second only to Greece in the Eurozone. In light of this, Italy have argued that an increase in public spending, which would include higher welfare payments to the poor and a reduction in the retirement age, would not threaten the EU’s financial stability.
The economy minister, Giovanni Tria, suggested that these policies would enable Italy to restart growth in the economy. In a letter to the European Commisison, he wrote: “The government considers macroeconomic and social conditions to be particularly unsatisfactory a decade after the start of the crisis and considers it necessary to accelerate growth,”
It is now expected that Rome and Brussels will enter into a three-week negotiation after a formal rejection is tabled against the Italian draft budget.