EU Commissioners Valdis Dombrovskis and Pierre Moscovici wrote a joint letter to warn Italy of its budget plan. Handing the letter directly to Italian Economy Minister Giovanni Tria, the EU started the first formal step to reject the budget which will lead to direct clash between Rome and Brussels. Italy will now have until October 22 to respond to the letter.
EU said in the letter that Italy’s plan is an “obvious significant deviation” of the recommendations adopted by the European Council under the 2019 Stability and Growth Pact. Also, while the Council suggested fiscal adjustment, the Italy plans fiscal expansion of close to 1% of GDP, and the “size of the deviation (a gap of around 1.5% of GDP) are unprecedented”.
EU also criticized that the macroeconomic forecasts under the plan has not been endorsed by the Parliamentary Budget Office. And this appears “not to respect” the rules of having forecasts produced or endorsed by an “independent body”.
Italian Prime Minister Giuseppe Conte said they’re ready to reply to EU’s concern and he’s not worried.
