Thursday

18th Jul 2019

Italy defiant on budget on eve of EU deadline

  • Rome: 'Only way to respect European parameters is to commit suicide,' Luigi di Maio said (Photo: Nick Kenrick)

Italy would be committing economic "suicide" if it fell in line with EU rules, its deputy leader has said, in a sign that Rome has little intention of bowing to pressure ahead of Tuesday's budget deadline.

"The only way to respect European parameters is to commit suicide, which then leads to recession," deputy prime minister Luigi di Maio, from the 5 Star Movement (5MS) party, told reporters in Rome on Monday (12 November).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Matteo Salvini mocked Jean-Claude Juncker on Sunday (Photo: European Parliament)

Matteo Salvini, Italy's interior minister, from the League party in the coalition, was equally defiant.

Italy did not intend to "touch one iota" of its spending plan for 2019 and says "No" to "threats and [EU] commissioners", he said.

He also mocked European Commission president Jean-Claude Juncker in a speech on Sunday.

"The only letters I accept are from Santa Claus," he said, referring to the commission chief's warning letters on Italian overspending. Santa Claus drinks "just a bit of mulled wine, to go with his chestnuts," Salvini added, alluding to rumours that Juncker drinks too much.

"Inspectors in Rome? We just need inspector Derrick and lieutenant Columbo, then we'll have all of them," Salvini also said, in a joke referring to two TV characters and the prospect of the EU sending budget monitors to Italy in future.

The two men's intransigence stood in contrast to the more conciliatory tone of Italy's finance minister, Giovanni Tria, who has been going back and forth to Brussels in recent weeks to try to avoid a clash.

Tria had, in the past, also said the EU demands would amount to "suicide".

He has said Italy would maintain its deficit target of 2.4 percent, which the EU commission rejected last month in an unprecedented move, saying it would make Italian debt unsustainable.

But slogans aside, he has also said the spending plans, which include tax cuts for small businesses and a hike in pensions and unemployment benefits, could be adjusted in future if Italian economic growth did not reach 1.5 percent next year - a figure which the EU commission believes to be too optimistic.

Midnight deadline

The noises from Rome come ahead of an EU deadline for Italy to submit a revised spending plan by midnight on Tuesday.

If the two sides cannot reach agreement, the EU commission could launch legal proceedings against Italy, leading, as a last resort, to fines worth billions of euros.

Di Maio, Salvini, and Italian prime minister Giuseppe Conte aim to meet on Tuesday to discuss their next move.

The fact that they did not invite Tria to their budget summit does not bode well.

But the tone from the EU side remained positive on Monday.

"The Italians are moving away not only from what they had promised us, but also from the minimum rules of the stability pact," Juncker told German broadcaster N-TV at an economic forum in Berlin, referring to an EU pact on fiscal rules.

'Moderate concern'

He added that he had only "moderate concerns" about the outcome of the dispute, however.

"Whoever has 130 percent of their economic performance as a public debt, must act more cautiously than someone who has sound finances," German finance minister Olaf Scholz also said, referring to Italy's debt pile, which is second only to that of Greece in the eurozone.

"I assume that the Italian government will make the necessary decisions that will make it possible that they will not get into trouble," he also added.

The EU budget clash with Italy comes in a difficult political context.

The EU fears that if it pushes Rome too hard it could lead to a backlash that would give more votes to the populist 5MS and League in next year's European Parliament election.

EU diplomats also fear that Italy might threaten to veto unrelated decisions, for instance, on the renewal of EU sanctions on Russia, unless the commission stands down.

Tuesday's deadline aside, the clash is likely to come to a head at the EU summit in Brussels next month.

But for their part, EU financial chiefs have said the politics of the situation were less important than the potential long-term damage to Italy that overspending might cause.

Long-term damage

"From previous experiences, we've seen that damage to the economy can be done quickly, but then it takes years to repair it," EU financial affairs commissioner Valdis Dombrovskis told Italian newspaper La Stampa over the weekend.

The market reaction to the populist budget had so far been muted, the deputy head of the European Central Bank, Luis de Guindos, said in Frankfurt on Monday.

But if things went badly, then Italian stocks and bonds could suffer, destabilising its banks, and creating a risk of contagion to other eurozone economies, he added.

"The strong market reactions to political events [in the past] have sparked new concerns about the link between banks and sovereign debt in some parts of Europe - this is the basis of the request for fiscal discipline and compliance with the rules," De Guindos said.

Agenda

EU elections and Italy's finances are in focus This WEEK

A debate among would-be EPP 'Spizenkandidat' candidates next week in Helsinki will be the first of many clashes of ideas ahead of European elections next May. The liberals are also holding their own congress.

EU commission rejects Italy's budget plans

The EU executive has asked Italy to resubmit its budget in an unprecedented rebuke, while warning Rome that public debt was the "enemy of the people".

Opinion

Austerity did not help Italy - maybe spending will?

Why all the fuss? You might not like their political views but let the Italian government implement some pro-growth reforms because austerity did not work in jumpstarting their economy.

Agenda

Brexit dominates EU affairs This WEEK

All eyes on London this week, where May struggles to hold onto power against Brexit rebels, while EU leaders meet in Brussels on Sunday to try to clinch agreement.

News in Brief

  1. Nata chief warns world against more Russian missiles
  2. Germany closes Amazon probe as EU opens another
  3. Report: US chipmaker Qualcomm set for new EU fine
  4. Ireland fears Brexit time zone split
  5. Selmayr to leave EU commission post
  6. EU 'appeasement' of Iran like that of Nazis, Israel says
  7. Report: EU anti-trust chief to go after Amazon
  8. Report: France to back Kovesi for EU prosecutor

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. Timmermans trolls Brexit 'idiot' negotiators
  2. Rudderless Europe: Will real Germany please stand up?
  3. PiS & Fidesz claim credit for von der Leyen victory
  4. Von der Leyen faces gender battle for commission posts
  5. EU proposes yearly rule of law 'reports'
  6. Poland 'optimistic' despite new EU law checks
  7. What did we learn from the von der Leyen vote?
  8. Is Golden Dawn's MEP head of a criminal organisation?

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Join EUobserver

Support quality EU news

Join us