August 3, 2020

Brussels gives a week to respond to Italy on their budgets without announcing if it will open a sanctioning process

Brussels takes its time. One week. And it will give its opinion on the Italian accounts together with that of the other Member States. Meanwhile, he will see if the markets are busy tightening Italian finances enough to double the pulse of the far-right Northern League government and the M5S.

The Commission received a "revised budget" late on Tuesday that, according to Rome, does not touch on the conflictive aspects for Brussels: the deficit targets and public spending. Of course, it includes more data on the sale of public buildings, which could help reduce the public debt of 131% of GDP to 126%.

Now, it will be the Commission's turn to analyze the Italian response.

"We can confirm that we have received a revised budget plan from the Italian authorities, and now the next step is for the Commission to complete its analysis of this draft, we will publish an opinion on November 21, together with the opinions on the budgets of all Member States, "Commission spokesperson Margaritis Schinas said at a press conference.

The spokesman for Economic Affairs of the European Commission, Christian Spahr, for his part, has not specified whether Brussels will also decide on November 21 – or at another time – if it opens a sanctioning proceeding to Italy, which could result in a fine equivalent to 0 , 2% of GDP (about 3,500 million).

Italy, at the moment, maintains the pulse. "If the EU sees it well, perfect, if it does not look good, we'll push forward," said Salvini.

In the last letter sent by Brussels to Italy On October 29, the European Commission referred to article 126, paragraph 3, of the Stability Pact, which opens the door to hypothetical sanctions for excessive debt. Sanctions that, fulfilling the requirements of Spain and Portugal, have never been applied in the past. But it is that in the past the Commission has never rejected a budget as it has done with Italy this time.

The letter affirmed that "the great budget expansion foreseen for 2019", together "with the risks of a reduction in nominal GDP growth, will be incompatible with the need to decisively reduce the debt to GDP ratio". In addition, he argues that the accounts presented by the M5S and the League are not in line with "the commitments assumed by Italy in its Stability Program" signed in April 2018 by the previous Democratic Party Government (PD, center-left).

Then, the PD said that Italy's deficit would be 0.8% in 2019 and in 2020, and would fall to 0.2% in 2021, while the current Italian administration estimates that the deficit will be 2.4% in 2019, of 2.1% in 2020 and of 1.8% in 2021.

The current Government also expects the country's debt to be 130% in 2019; 128.1% in 2020; and 126.7% in 2021.

Letter from the Italian Government to the European Commission


Source link