Brussels queries Italy budget
October 23, 2014
European Jobs and Growth Commissioner Jyrki Katainen on Thursday asked Italy to explain its ''significant deviation'' from a balanced 2015 budget. Italy's proposed budget for next year will breach the EU Stability and Growth Pact deficit limit of 3 percent of GDP.
The European Commission is currently assessing draft budget plans submitted by eurozone countries under a system meant to spot financial trouble early on. In a letter to Rome, Katainen also asked Italian Economy Minister Pier Carlo Padoan how Italy ''could ensure full compliance with its budgetary policy obligations.''
The eurozone's third largest economy appeared to accept confrontation with Brussels by planning for tax cuts of 18 billion euros (22.78 billion dollars), and pushing back the deadline for attaining a structurally balanced budget until 2017.
Italy and France lining up against Brussels
Italy's Prime Minister Matteo Renzi wants to use the tax cuts to jump start the country's economy, following three years of stagnation. It's expected to reply to Katainen's request by Friday. If countries are deemed to be in ''serious non-compliance'' with deficit rules, the European Commission can ask them within two weeks to resubmit tightened budget plans.
But it may find its hand stayed in these cases. France also has said it cannot reach a balanced budget this year or next - and it has already had two years grace from Brussels. Paris and Rome insist public expenditure is essential to boost growth, and seem unwilling to back down.
The two countries are opposed by Germany, which is steadfastly holding to a policy of austerity and reform. The controversy is likely to feature at the two-day summit of EU leaders beginning this Thursday. Eurozone leaders are due to hold a separate meeting on Friday.
bew/hg (dpa, Reuters)