The Italian government on Tuesday defied the European Commission by sticking to its big-spending budget plan, risking financial sanctions in a high-stakes standoff with Brussels.
Despite pressure from the European Commission, which rejected Rome’s budget outright last month in a first for the EU, Italian Deputy Prime Minister Luigi di Maio vowed to stand firm on the nation’s anti-austerity plans.
“The budget will not change, neither in its balance sheet nor in its growth forecast. We have the conviction that this is the budget needed for the country to get going again,” Di Maio, who leads the anti-establishment Five Star Movement (M5S), said on Tuesday evening after a ministerial meeting.
M5S and its coalition partner, the far-right League, insist the budget would help kick-start growth in the eurozone’s third-largest economy, and reduce the public debt and deficit.
The European Commission gave Italy until Tuesday to make changes to its plans and warned non-compliance could activate the Excessive Deficit Procedure (EDP), a complicated process that could lead to fines and possibly provoke a strong, adverse market reaction.
Italy intends to run a public deficit of 2.4 percent of GDP next year — three times the target of the government’s center-left predecessor — and one of 2.1 percent in 2020, but Brussels forecasts Italy’s deficit would reach 2.9 percent of GDP next year and hit 3.1 percent in 2020 — breaching the EU’s 3 percent limit.
Italian Deputy Prime Minister Matteo Salvini, who is also the leader of the League, on Monday vowed to put his back into “defending the budget, as if it were a rugby scrum.”
While Rome targets economic growth of 1.5 percent, Brussels anticipates just 1.2 percent, putting Italy at the bottom of the EU table.
The IMF forecasts growth of 1 percent for 2020 and was skeptical of Italy’s reform program in its latest report on the nation.
Italian Minister of Economy and Finances Giovanni Tria has accused Brussels of getting its sums wrong.
It would be “suicide” to try to reduce the deficit to the previous goal of 0.8 percent of GDP, he has said, insisting “we must get out of the trap of weak growth.”
The big problem is Italy’s public debt, now 2.3 trillion euros (US$2.6 trillion), or 131 percent of GDP, is way above the 60 percent EU ceiling.
The fine for refusing to review the budget could correspond to 0.2 percent of Italy’s GDP — about 3.4 billion euros.
European Commissioner for Economic and Monetary Affairs and the Euro Pierre Moscovici has said he hopes a compromise can be found to avoid sanctions.
Speaking on Tuesday to the European Parliament, German Chancellor Angela Merkel said the EU wanted to reach out to Italy, a founding member.
“But Italy also adopted the many rules that we now all have in common,” she added.
The European Commission “will make the first step to move Italy into EDP” after a debt update expected on Nov. 21, former Italian department of treasury chief economist Lorenzo Codogno said.
The nation would likely be given three to six months to prepare correction plans, after which nothing would happen until a new European Commission takes office at the end of next year following European Parliament elections, he said.
“The true guardians of fiscal discipline will be, as usual, financial markets,” he said.
All eyes are now on the spread — the difference between yields on 10-year Italian government debt compared with those in Germany — which has more than doubled since May.
A wider fear is that stress in Italy could spread to other European nations which are only just recovering from the eurozone debt crisis.
“We do not expect a crisis that would lead to a loss of market access,” Economist Intelligence Unit analyst Agnese Ortolani said.
However, the nation’s debt and the weakness of its banking sector mean “Italy would be too large to rescue without massive ECB [European Central Bank] support in the event of a large-scale financial crisis,” she said.
ACTIONABLE ADVICE: The majority of chatbots tested provided guidance on weapons, tactics and target selections, with Perplexity and Meta AI deemed to be the least safe From school shootings to synagogue bombings, leading artificial intelligence (AI) chatbots helped researchers plot violent attacks, according to a study published on Wednesday that highlighted the technology’s potential for real-world harm. Researchers from the nonprofit watchdog Center for Countering Digital Hate and CNN posed as 13-year-old boys in the US and Ireland to test 10 chatbots, including ChatGPT, Google Gemini, Perplexity, Deepseek and Meta AI. Eight of the chatbots assisted the make-believe attackers in more than half the responses, providing advice on “locations to target” and “weapons to use” in an attack, the study said. The chatbots had become a “powerful accelerant for
Australians were downloading virtual private networks (VPNs) in droves, while one of the world’s largest porn distributors said it was blocking users from its platforms as the country yesterday rolled out sweeping online age restriction. Australia in December became the first country to impose a nationwide ban on teenagers using social media. A separate law now requires artificial intelligence (AI)-powered chatbot services to keep certain content — including pornography, extreme violence and self-harm and eating disorder material — from minors or face fines of up to A$49.5 million (US$34.6 million). The country also joined Britain, France and dozens of US states requiring
Since the war in the Middle East began nearly two weeks ago, the telephone at Ron Hubbard’s bomb shelter company in Texas has not stopped ringing. Foreign and US clients are rushing to buy his bunkers, seeking refuge in case of air raids, nuclear fallout or apocalypse. With the US and Israel pounding Iran, and Tehran retaliating with strikes across the region, Hubbard has seen demand for his product soar, mostly from Gulf nation customers in Bahrain, Qatar, Kuwait and the United Arab Emirates. “You can imagine how many people are thinking: ‘I wish I had a bomb shelter,’” Hubbard, 63, said in
STILL IN POWER: US intelligence reports showed that the Iranian regime is not in danger of collapse and retains control of the public, casting doubt on Trump’s exit Nearly every US Senate Democrat on Wednesday signed a letter sent to US Secretary of Defense Pete Hegseth requesting a “swift investigation” of airstrikes on a girls’ school in Iran that killed scores of children and any other potential US military actions causing civilian harm. Reuters reported on Thursday last week that US military investigators believe it is likely that US forces were responsible for the Feb. 28 strike on the school, as US and Israeli forces launched attacks on Iran. “The results of this school attack are horrific. The majority of those killed in the strikes were girls between the ages
RSS