EU Slams Italy's 'unprecedented' Deviation From Budget Rules

Faizan Hashmi Published October 19, 2018 | 03:24 AM

Brussels, (APP - UrduPoint / Pakistan Point News - 19th Oct, 2018 ) :The European Commission on Thursday formally warned Italy that its budget plans for 2019 are a serious concern, demanding "clarifications" from Rome over its unprecedented deviation from EU rules.

Italy's populist government on Monday submitted its draft 2019 budget to the European Commission in which it laid out plans to increase spending and end the austerity policies of recent years, despite deficit warnings.

Italy's deficit is now projected at 2.4 percent of GDP, far higher that the 0.8 percent estimate given by the earlier centre right government.

Brussels says Rome needs to cut the deficit in order to begin reducing its massive debt, which exceeds 130 percent of annual economic output -- way above the EU's 60 percent ceiling.

The budget drew stinging criticism from the EU's top economic affairs officials, who penned a letter to Rome describing its plans as "unprecedented" and warning that Brussels does not rule out rejecting the entire budget.

In the letter, Commission Vice President Valdis Dombrovskis and European Affairs Commissioner Pierre Moscovici said the 2019 budget was in "serious non-compliance" with EU law.

Crucially, this means the Italian budget can be rejected by Brussels and sent back for revision -- in what would be a first within the European Union.

The commission gave the Italian government until 1000 GMT on Monday to respond.

Underlining the sensitivity of the matter, Moscovici delivered the letter in person to Italian Finance Minister Giovanni Tria.