The Italians want to increase their deficit by quite a lot. Brussels says that it can’t do this even though other less meddlesome countries have been allowed to. It’s a strange instance of a crony organization actually being AGAINST greater government spending.
Earlier this morning, we reported that according to Deutsche Bank economists – and virtually everyone else except for those who were apparently waving in BTPs yesterday – Italy was squarely on a collision course with the European Commission, whose President Juncker said yesterday that there would be a “violent reaction” from other euro area countries if the Italian budget were to be approved.
Moments ago, Spiegel confirmed this when it reported that the “dispute between the EU Commission and Italy’s populist government is entering the next round” after EU Commissioner Guenther Oettinger said that the EU Commission would reject Italy’s 2019 budget plan, which is not compatible with EU rules.
The Italian plan is a little too “Italian” in every sense for Brussels.
The coalition’s 2019 budget includes plans to boost welfare spending and cut some taxes essentially. It rows back on unpopular pension reforms, made in 2011, that raised the retirement age and aims to introduce a basic income for the poor.
European Commission officials have expressed dismay and frustration at Italy’s rebellious stance over spending but the coalition is largely unrepentant about its plans, throwing down the gauntlet to Brussels.