Sunday , October 17 2021

Despite the pressure of Brussels, the Italian budget "does not change"



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conjuncture

The Italian populist government, which was convened by the European Commission to review the 2019 budget before Tuesday, said it had no intention of being implemented, and that its implementation was still hypothetical, given the risk of financial sanctions.

"The budget is unchanged on balance sheets or growth forecasts, and we are convinced that the budget should be re-launched," said Deputy Prime Minister and leader Luigi Di Maio. Said. 5-star movement (M5S, antisystem).

"Our goal is to keep the deficit at 2.4% of GDP and we are committed to maintaining it." Said. ally Matteo Salvini, boss of the league (far right) and head of government Giuseppe Conte.

"We are working on a budget that provides more work, more pension and less tax. If it is more appropriate to Europe, then continue if it is not in Europe," Mr. Salvini is sure to come to this meeting.

For the government, the anti-savings budget will resume loose growth and thus reduce the public deficit and the country's large public debt.

However, for the first time in the history of the European Union, the Brussels authorities rejected this Italian draft budget on 23 October. They are deafening against the Italian auctions supported by the whole of the eurozone, which promises a clear outlook of 2.4% of GDP in 2019 and 2.1% in 2020. .

According to the Commission, the measures envisaged in the budget could increase the deficit by 2.9% in the coming year and 3.1% in the 2020. Rome is considered to be 1.5%, especially because it predicts a growth rate of 1.2%.

In a report published on Tuesday afternoon, the International Monetary Fund (IMF) reiterated a growth forecast of 1% in Italy in 2020 and was skeptical of the government's announced reforms.

"It is welcomed that officials focus on growth and social inclusion," Fonda said. However, the current projections are expected to keep 130 percent of GDP in public debt over the next three years.

According to the Italian press, Economy Minister Giovanni Tria is expected to send a letter to Brussels in the coming hours to explain the government's decision and the government's planned structural reforms and investment plan will be presented. .

"Excessive open procedure"

By refusing to change its budget, Rome was exposed to the opening of the "excessive budget deficit procedure", which would result in fines corresponding to about 0.2% of GDP (about 3.4 billion euros).

In front of the European Parliament in Strasbourg, German Chancellor Angela Merkel reiterated that the EU wants to u reach a Italy, the founding country of the union.

"Italy accepted many rules that we all share," he said. "I hope a solution can be found."

European Commissioner for Economic Affairs Pierre Moscovici also increased the call for dialogue in the hope of reaching a "compromise".

According to Lorenzo Codogno, founder of LC Macro Advisors, Italy should be "open-ended procedure by the end of January (EDP)", but three to six months to prepare plans for corrections, "Italy will reach unimpeded European elections". Then, in the autumn of 2019, “nothing will happen before the new Commission enters into force Daha.

According to Codogno, due to the lack of rapid movement at the European level, financial markets will be "the real protectors of budget discipline" as usual.

Since the middle of May, the close-up gap between the start of the debates for the formation of the populist coalition, the spread, the Italian and German borrowing rates has doubled and is now released around 300 points. According to the Central Bank of Italy, this represents an additional cost of 1.5 billion euros in six months.

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