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Brussels rejects Italy budget, paves way for sanctions Brussels rejects Italy budget, paves way for sanctions
(35 minutes later)
The European Union took the first step on Wednesday toward fining Italy after ruling that Rome's spending drive violates the bloc's fiscal rules. The European Union took the first step on Wednesday toward fining Italy after ruling that the country's spending drive violates the bloc's fiscal rules. Brussels has rejected Rome's budget plan for 2019.
In a report on Italy's debt, the European Commission said that it has rejected the Italian government's budget plan for 2019. “The Commission confirms the existence of a particularly serious case of non-compliance,” the EU said in its annual review of euro-area nations’ spending plans referring to Italy’s 2019 budget. “With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability.”
"Our analysis suggests that the debt rule must be considered to have not been respected," the report states. "We conclude that the opening of a procedure for excessive deficit based on the debt is therefore justified". Brussels has repeatedly voiced concerns over Rome's borrow-and-spend plans, warning the Italian government that it could trigger another debt crisis that would hurt them all.
Brussels has repeatedly voiced concerns over Rome’s borrow-and-spend plans, warning the Italian government that it could trigger another debt crisis that would hurt them all. According to EU regulations, a member country’s public debt cannot be higher than 60 percent of its gross domestic product, or – if it is – has to be falling towards 60 percent at a satisfactory pace.
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Italy’s populist the Five Star Movement (M5S) party did not heed the Commission’s call to make significant changes to the budget, saying the deficit was needed to finance key pledges and boost sluggish growth.
Rome has also argued that boosting growth is the best way to bring down Italy’s debt-to-GDP ratio of over 130 percent.
Italy’s Deputy Prime Minister Matteo Salvini said that he won’t compromise on the budget plan’s core items like pension reform, citizens’ income, and lower taxes. He told reporters in Rome that he is, however, willing to make small changes in areas like investments, on which he is “open to dialogue with everyone.”
Italy could now face penalties from the European Union if it does not adjust its budget.
According to Salvini, fines against Italy would be “disrespectful.” “We are convinced about the numbers in our budget. We will talk about it in a year's time,” he added.
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