BrusselsItaly could expect a postponement of its fiscal policy changes by January, before the EU Commission fines for breaches of debt rules. This is clear from a protocol known Monday on an EU meeting.
There is no doubt after the letter that Italy has violated EU stability rules. But the EU Commission wants to avoid raising the Eurosceptics in the government in Rome. It must be avoided that the Commission's attitude for the political purposes of certain circles in Italy be exploited, said Economic Commissioner Pierre Moscovici in the minutes.
It is expected that the EU Commission will propose an excessive deficit procedure against Italy on 2 July, unless the Roman government is prepared to make concessions on the current and next year budgets. The procedure should be confirmed by the EU finance ministers at their meeting on 8 and 9 July. Italy would then have to make rapid corrections to its fiscal policy or risk fines. Once the process has started, it is up to the EU Commission to set deadlines for consequences.
From the point of view of the EU Commission, the violation of the deficit rules in Italy in 2018 is out of the question. According to the plans for 2019 and 2020, the limits for new indebtedness and general government debt will not be met. Italy's national debt was 132 percent of gross domestic product (GDP) last year, and the limit is 60 percent according to EU rules.
Italy's Deputy Prime Minister Matteo Salvini has repeatedly declared the EU's deficit rules obsolete and promised tax cuts of at least ten billion euros. The leader of the right-wing Lega governs in a coalition with the populist 5-star movement. Salvini and 5-star boss Luigi Di Maio both argue that tax cuts would boost the economy.
More: Italy's Prime Minister Conte remains in the discussion about the excessive deficit procedure on a confrontation course.
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