The European Commission has disapproved of Italy’s planned deficit of 2.4 percent of GDP, giving the Italian government three weeks to find a solution. Interior Minister Matteo Salvini reacted that such expenses are crucial to set Italy’s slow economy in motion and ultimately lower public debt.
Brussels, on the other hand, argues that an increase in spending could make investors nervous and shake the eurozone. Even though there were budget deviations in the past from other ‘big players’ like France and Germany, the Commission never took such harsh action.
Salvini claims that Italy won’t rewrite the draft budget no matter how many warnings Brussels sends. When people work more, they spend more and can pay higher taxes, explained Salvini. Brussels claims that the Italian government is openly violating the agreed-on eurozone rules, Salvini thinks the criticism stems from an unfamiliarity with the Italian environment. As he puts it, it may even be an attempted attack on the Italian economy in order to help foreign investors.
Italy is the third largest economy in the eurozone, and at the same time has the second highest public debt after Greece. Thus, the Commission is further afraid of an enormous debt burden, which in total is now exceeding 131 percent of Italian GDP.
The current Italian government has been in dispute with the EU ever since it took office. Illegal migration continues to be the main bone of contention between Rome and Brussels. The two are also divided over the sanctions against Russia.
The latest dispute over the draft budget may theoretically result in sanctions of billions of euros imposed on Italy. Yet Italy has no intention to give up because it would mean a return of technocrats who promote absurd cuts, said Five Star Movement leader Luis Di Maio.