The EC confirmed that EU and Italy reached an agreement on the budged for 2019. This was stated by the EU Commissioner for the issue of the euro and social dialogue Valdis Dombrovskis.
According to the agreement reached today on the budget deficit of Italy in 2019, it should 2.04 percent of GDP against 2.4 percent in the initial proposal and the expected economic growth should be 1 percent rather 1.5.
“The agreement reached is not the most ideal, but it avoids the start of the budget deficit procedure,” Dombrovskis added.
The deal was the result of intense talks between Italy and the Commission and Rome decided to ask a decision, although it previously warned that it would not sacrifice the spending plans. Mateo Salvini said in October that Italy would not change “even a comma in the budget”. The current coalition government of Italy, a set of extreme left and extreme right-wing anti-European political movements, is prominent with Prime Minister Giuseppe Conte, but practically politics is dictated by Di Mayo and Salvini.
Despite their sharp political differences, both found a common cause – and local popularity – in their mutual dissatisfaction with the European Union and its perceived control over Italy’s internal finances. They tried to build public support with a budget deficit to finance social assistance projects and lead to widespread tax benefits.
In November, the EU Commission rejected the final draft, stated by Italy as “a gross violation of established EU economic norms”. Evenmore EC intended to launch a sanction procedure against Rome, which is taking place in case a particular EU country fails to fulfil its obligation to comply with economic parameters.
Italy has been violating EU budget criteria for years. This charge was made last week by EU Commissioner for Economic and Financial Affairs Pierre Moscovici.
He stressed that the budget situations in France and Italy cannot be compared.
France will pass the deficit limits next year if it fails to adopt more cost cuts after President Emmanuel Makron has taken into account the protestors.
The budget deal must be approved by the Italian Parliament.
It is comforting that the first reaction of the markets was positive. The Milan Stock Exchange is intensifying and supply and demand are beginning to be sought. After all, even with the reconciliation with Brussels, the economic outlook for Italy is still a source of concern for investment. It is about responding to long-term problems in the country’s economy.
