EU CIVIL WAR: Brussels slaps down Italy over budget concessions

Daily Express :: Politics Feed
EU CIVIL WAR: Brussels slaps down Italy over budget concessions

Italy has proposed to cut its planned budget deficit for next year to 2.04 percent from 2.4 percent of gross domestic product. EU economy commissioner Pierre Moscovici said: “It is a step in the right direction but we are not there yet, there are still steps to be taken, perhaps on both sides.” Italy has engaged in a two-month battle with Brussels over the budget triggering a large rally in the country’s bonds.

Yesterday Italy’s 10-year bond yield fell to a two-and-a-half month low.

The EU threatened Rome with disciplinary action claiming their original budget breached prior spending commitments.

Italy drafted a an expansionary budget with a deficit target of 2.4 percent of GDP in 2019 from 1.8 percent this year.

This budget was rejected by the EU as they said it would not lower the country’s large public debt.

Brussel’s told Rome to revise the budget and therefore avoid potential fines.

Italian Prime Minister Giuseppe Conte said of his new budget unveiled earlier in the month, “reducing the deficit target” could “reasonably happen.”

He did not give other details to have “confidentiality for the negotiation to succeed.”

Mr Conte said he believes the government to accept the new proposal and the Commission judged it as “significant.”

He said the government was “not at all betraying the trust of Italians” and “we made a serious and reasonable offer.”

Leaders of the coalition parties said their spending programmes would stay the same.

Matteo Salvini who leads the League said Mr Conte had their “full confidence.”

Fabio Fois, an analyst from Barclays Capital, told the Financial Times the budget could suggest more pro-business voices within the League gained influence in the coalition.

He said: “This implies that it may have taken a leading role despite its junior status within the urlingcoalition. The League’s standing government may have increased, the government might be slightly less inclined to escalate tensions within the EU.”

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