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EU-EUROZONE-ECONOMY-ITALY
Italy vows to keep euro, big-spending budget despite EU standoff
ROME, Nov 10, 2018 (BSS/AFP) – Italy will not leave the eurozone, populist
Deputy Prime Minister Luigi Di Maio said on Friday, despite a standoff with
Brussels over Rome’s big-spending budget.
“As head of the Five Star Movement and deputy prime minister I guarantee
it,” Di Maio told journalists in Rome.
“It’s no longer time to leave the euro, I already said so” before the
election in March, the head of the one-time fervently eurosceptic Five Star
Movement (M5S) said.
“Times have changed, over the last year I have become convinced that Italy
should remain in the eurozone,” Di Maio said.
The populist government in Rome has been under massive pressure since the
European Commission last month rejected its 2019 budget, giving the ruling
coalition in Rome until Tuesday to make changes.
Failing that, Brussels could put Italy into something called the “excess
deficit procedure”, a complicated process that could eventually lead to fines
and provoke a strong market reaction.
The Italian government — a coalition of the far-right League and M5S —
plans to run a public deficit of 2.4 percent of GDP, three times the target
of its centre-left predecessor.
Scrutinising those plans, the European Commission on Thursday said Italy’s
deficit will reach 2.9 percent of its Gross Domestic Product next year, much
bigger than the 1.7 percent in its previous forecast.
Finance Minister Giovanni Tria insisted that the budget would not be
radically changed.
The timetable for implementing some of the more expensive measures,
including a basic minimum income for poor Italians and bringing forward the
retirement age, has yet to be decided.
“The (budget) fundamentals will remain the same,” Tria told journalists
after talks with eurogroup head Mario Centeno.
“We continue to talk with the European Commission.”
Tria said that sticking to the previous government’s 0.8 percent deficit
target would be “suicide” given the Italian economy’s current sluggish
growth.
Centeno nevertheless said Italy should revise its budget in order to
“dispel doubts” on financial markets and from fellow eurozone economies.
“Uncertainty is carrying a toll in the form of higher financing costs for
the Italian state, Italian companies and Italian citizens,” said Centeno,
effectively the Eurozone’s finance minister.
BSS/AFP/HR/0955