EU orders Italy to redo budget and cut spending

25 Oct 18

The European Commission has told Italy to revise its budget for next year to rein in spending - the first time it has taken such an action.

Italy now has three weeks to submit a new draft budget to Brussels.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said: “The opinion adopted [on Tuesday] by the commission should come as no surprise to anyone, as the Italian government's draft budget represents a clear and intentional deviation from the commitments made by Italy last July.

“However, our door is not closing: we wish to continue our constructive dialogue with the Italian authorities.”



This is the first time the commission has ordered a member state to rethink its spending plans.

In the summer, Italy had committed to reducing its high debt levels and target a deficit of 0.8% of GDP. But the draft budget sets out a deficit three times higher, at 2.4% of GDP.

Italy’s debt stands at more than 130% of GDP and is the second largest in the EU, after Greece. Its economy is also still smaller than it was in 2008, before the financial crash.

In response to Brussels decision, Italy’s deputy prime minister Luigi Di Maio said on Twitter: “This is the first Italian budget that the EU doesn’t like. No surprise: This is the first Italian budget written in Rome and not in Brussels!”



In a letter despatched to Brussels earlier this week, it also defended its high spending plans saying they would be in the interest of the “entire European economy”.

The current Italian government is a coalition between populist parties The League and The 5-Star Movement. It has promised to bring in both tax cuts and higher spending on social welfare including pensions and unemployment benefits.

Last week, Brussels also flagged concerns about France’s spending plans, warning in a letter, that the planned debt reduction in 2019 does not respect the EU’s proposals.

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