Rome-Brussels standoff culminates as Italy delivers budget

Italian Prime Minister Giuseppe Conte (R) is welcomed by European Commission President Jean-Claude Juncker (L) for an informal meeting on migration and asylum issues in Brussels, Belgium, 24 June 2018. European Commission President Jean-Claude Juncker hosts the gathering ahead of a full summit of all 28 European Union leaders to overhaul the EU asylum system on June 28. EPA-EFE/YVES HERMAN / POOL

Rome-Brussels standoff culminates as Italy delivers budget


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The Italian government is due to officially submit its 2019 budget to the European Commission on Monday.

The tension between Rome and Brussels is mounting.

In a statement on Friday, Prime Minister Giuseppe Conte ruled out the possibility of a compromise over the 2.4% of GDP budget deficit target.

The Italian fiscal target is three times biggest than had previously agreed with the Paolo Gentiloni government.

Last Wednesday, Economy Minister Giovanni Tria quantified fiscal expansion to €37bn. This amounts to additional spending of €22bn and a reduction of the overall by €15bn.

Objections from Brussels have been met with a combative attitude.

In an interview with Le Monde on Friday, European Commission President Jean-Claude Juncker said that Italy is free to make policy choices over basic income and taxes but “must respect the rules to avoid endangering European solidarity.”

In response, deputy prime minister Matteo Salvini told the Italian news agency ANSA on Friday that Juncker should “shut up.”

From the IMF conference in Bali, Indonesia, European Central Bank (ECB) Governor Mario Draghi said Friday that “highly indebted EU States” must stick to the rules of the Stability and Growth Pact.

“The transparent and consistent implementation of the EU’s fiscal and economic governance framework, over time and across countries, remains essential,” Draghi said.

Turning his attention explicitly to Italy, Draghi said on Saturday that officials must “calm down,” and consider that the country may have to pay greater borrowing yields. “These statements,” Draghi said, created real damage and the results is that “households and firms pay higher interest rates on loans.”

In response, Senator Alberto Bagnai of the Lega coalition partners accused Draghi of agitating markets. It is “Draghi that should calm down and stop mentioning the euro,” Bagnai said.

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