Published: Fri, October 19, 2018
Worldwide | By Gretchen Simon

Italy splurges on welfare in new budget

Italy splurges on welfare in new budget

European Union sanctions against Russian Federation are damaging Italian businesses, Prime Minister Giuseppe Conte said on Tuesday, underscoring growing unhappiness in Rome over the long-running curbs on Moscow.

Italy's draft budget for next year boosts welfare spending, cuts the retirement age and hikes deficit spending. "We have full confidence that the European Commission will handle the question in the way imposed by the treaties", Brinkhaus told reporters in Berlin.

Commenting on the Italian budget, in an overnight note Goldman said that Italy is not the only country to deviate from the EU's country-specific recommendations and be in breach of the fiscal rules, with the bank noting that France is also non-compliant with the public debt rule.

At the same time the 19 countries sharing the euro want to integrate more deeply in economic terms, by giving more powers to their bailout fund ESM, setting up a euro zone budget and a euro zone-wide deposit insurance scheme.

If the European Union executive arm thinks there is a risk of Italy's finances going seriously off track then it must raise the alarm with the government within a week, and issue a negative opinion requesting revisions to the budget within two.

Speaking at a business conference in Moscow on Wednesday, deputy premier and far-right League party leader Matteo Salvini appealed to Brussels, Berlin and Paris to take care of their "own economies" and "let the Italian government take care of Italians".

Italy submitted its budget draft at the last minute on Monday night, giving the Commission two weeks to respond, but it appears it won't need that long.

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Brussels is concerned that Italy's budget will increase the country's deficit.

The European Commission will now assess the budget and could accept or reject it, asking the coalition to amend its plans.

"The idea that this budget can blow up Europe is totally unfounded", he said.

The other vice-Prime minister, Luigi Di Maio, the boss of the Movement 5 stars (M5S, antisystème), has assured that the government "ir (ait) from the front with the measures requested by the people".

This contravenes European Union regulations that call on Italy and other highly indebted countries to steadily narrow the shortfall toward zero.

The spread between the yield on Italy's benchmark 10-year bonds and their German equivalent stood at just over 3 percent on Monday, broadly stable compared with the end of last week.

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