Italy's budget fight with Brussels shifts focus to 2020 - sources

By Giuseppe Fonte and Gavin Jones ROME (Reuters) - Italy believes it can satisfy the European Commission's demands over its public accounts for this year, but the real sticking point in negotiations is now about 2020, government sources say. Brussels has threatened Italy with disciplinary action that would entail closer oversight of its fiscal policy and could eventually lead to fines

Reuters June 18, 2019 01:05:28 IST
Italy's budget fight with Brussels shifts focus to 2020 - sources

Italys budget fight with Brussels shifts focus to 2020  sources

By Giuseppe Fonte and Gavin Jones

ROME (Reuters) - Italy believes it can satisfy the European Commission's demands over its public accounts for this year, but the real sticking point in negotiations is now about 2020, government sources say.

Brussels has threatened Italy with disciplinary action that would entail closer oversight of its fiscal policy and could eventually lead to fines.

It complains Rome did not cut its public debt in 2018 as promised, and sees it continuing to rise this year and next unless the anti-austerity government adopts belt-tightening measures.

The government in Rome now believes its 2019 budget deficit will come in at 2% of gross domestic product - a level already accepted by the Commission in December, a government source said, but Brussels also wants commitments for 2020.

That has forced Economy Minister Giovanni Tria into a tough negotiation with the coalition of the anti-establishment 5-Star Movement and the far-right League, which does not want to sign up to any deficit cuts for next year.

"The parties are open to discuss 2019, but they do not want to be bound over the 2020 budget," added the source, who asked not to be named.

The Treasury estimates that next year's deficit would be 1.8% of GDP under an unchanged policy scenario, a second source said.

That is lower than the government's official goal 2.1%, but the ruling parties want it increased to make room for tax cuts to boost Italy's stagnant economy.

"I would gladly raise the deficit close to the 3% limit," the League's economics chief Claudio Borghi said on Monday, referring to the ceiling set by the 1992 Maastricht Treaty that laid the foundations of monetary union.

The League, which trounced 5-Star at May 26 European parliamentary elections, has made tax cuts its flagship policy ahead of the 2020 budget.

"The Italians' vote means we must cut taxes", League leader Matteo Salvini told reporters on Monday during a visit to United States.

The next step in the budget tussle is expected to be a June 20-21 summit in Brussels, where Prime Minister Giuseppe Conte will try to plead Italy's case with outgoing Commission president Jean-Claude Juncker and EU leaders.

(Reporting by Giuseppe Fonte, editing by Gavin Jones and Toby Chopra)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.