European Commission formally rejects Italy’s budget after its regular meeting. Vice President For the Euro Valdis Dombrovskis said in a press conference that “today, for the first time, the Commission is obliged to request a euro area country to revise its draft budget plan.”
He added, “we see no alternative than to request the Italian government to do so. We have adopted an opinion giving Italy a maximum of three weeks to provide a revised Draft Budgetary Plan for 2019,”
Regarding Italy’s letter to the Commission yesterday, Dombrovskis said “Unfortunately, the clarifications received yesterday were not convincing to change our earlier conclusions of a particularly serious non-compliance with the recommendation addressed to Italy by the Council on the 13th of July.” And, “the Italian Government is openly and consciously going against the commitments it made.”
The Commission now requests Italy to amend the draft buget in the next three weeks for resubmission. And, the Commission is ready to open a disciplinary process called the excessive deficit procedure against Italy.
Italian 10 year yield jumps notably after the news as it’s now back at 3.556, after dipping to 3.42 earlier today.
EUR/USD is steady in range. But EUR/JPY dips further towards 128.32 also on broad based risk aversion.
