The European Commission asked Rome to revise its budget plan for 2019 submitted in October. The decision on the budget of Italy would be made in December, Eurogroup chairman Mario Centeno told reporters.
The European Commission, in particular, is not satisfied with the high social costs. And the ministers call on Italy to respect the EU’s budget rules, TASS quotes the source in Brussels.
Italy became the first EU country ever to face a requirement from the European Commission to improve its budget draft. Rome ignored the European Commission’s warnings made in June and on October 23 Italy paid for that disobedience. However, the Eurogroup calls for a "constructive dialogue" with Rome.
According to the instructions of the European Commission, Italy was supposed to cut its budget deficit: the figure should have decreased by 0.6% of GDP compared to last year. But under the draft budget the Italian deficit should increase by 0.8-0.9%. The size of the deviation from the EU requirements made up €25 billion.
Initially, Rome was given three weeks to finalize the budget, but it seems that the Italian government is not going to change its budget plans. The investors are concerned by the confrontation between Rome and Brussels. Against this background, the spread between 10-year government bonds yields in Italy and Germany reached a five-year maximum. Credit Suisse AG stated earlier that Italy's banking system will be under pressure if the spread exceeds 400 basis points.
