European Commission does not approve the draft budget submitted by Italy (UPDATED)

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The European Commission has formally rejected Italy’s draft budget. The move which is an unprecedented step for eurozone fiscal authorities means that Italy’s government will have to rein in its spending plans. If this would not happen, Italy be facing fines from the Commission.

The commission voted to request changes to the spending plans for 2019, which go over previously agreed deficit targets.

The EU Commission vice-president responsible for the Euro, Valdis Dombrovskis said  that Brussels had “no alternative” than to request changes to draft budget plans submitted by Italy earlier this month, as  “they breached previous commitments the country had made to reduce its deficit and debt levels.”

Speaking in Strasbourg, Dombrovskis said that explanations sent by Italy earlier this week were “not convincing” and did not change their earlier conclusions of a particularly serious non-compliance.

The move marks the first time that Brussels has requested changes to a country’s spending plans.

Italy now has three weeks to either make changes or ignore the commission’s warnings.

If Italy refuses to budge, Brussels’ next step would be to open an “excessive deficit procedure” that could end with financial sanctions in 2019.

(Report on FT)

 

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