Everything, unfortunately, as expected. The European Commission has rejected the Italian Maneuverdefinitively rejecting the programmatic budget document of the Italian government for 2019.
The Italian maneuver sees a “no respect particularly serious” of the budgetary rules, in particular of the Ecofin recommendation of last July 13, explains the EU in the evaluation adopted today. It is therefore with “regret” that Brussels “confirms” its previous assessment of Italy's draft budget.
The Commission has also adopted the debt report, thus paving the way for a infringement procedure for excessive deficit in the coming weeks.
The news has an impact on MY BAG which reduces earnings (+0,47%) after the strong rebound recorded previously. On the spread, which goes up 319 basis points from 314 at the opening.
Returning to Brussels, right from the eve, the decision of the commissioners seemed to have become inevitable after the refusal of the Lega-M5s government to make changes to the "substantial and considerable" changes requested by the EU last October 23 due to the considerable deviations established with respect to the commitments made in European headquarters.
“Our analysis today – 126.3 report – suggests that the debt criterion should be considered as not met. We conclude that the opening of a debt-based excessive deficit procedure is therefore justified”. The EU Commission writes it in its report on the Italian debt.
In the following press conference, the vice president of the EU Commission Valdis Dombrovskis he also verbally confirms what was written in the assessment: “Our analysis shows that Italy's structural deficit should increase by 1% of GDP in 2019. These are eloquent figures. I am sorry to confirm today our assessment according to which the Italian financial is particularly at risk of serious violation of the recommendation of the Council of 13 July last”.
“In a situation of very high debt – continues Dombrovskis – Italy is essentially planning significant additional spending, instead of the necessary budgetary prudence. Furthermore, I want to say that the impact of this maneuver on growth will probably be negative from our point of view. It does not contain significant measures to strengthen the growth potential, in fact, possibly the opposite.
“An excessive deficit procedure will be opened. The Italian situation worries everyone, because all European countries are part of the same team". The vice president of the EU executive then reiterated his willingness to dialogue with the Italian authorities, "but we believe that this situation must be addressed".
The EU commissioner for economic affairs is even tougher, Pierre Muscovici. “We have met Giovanni Tria several times. I myself spent two days in Rome last month. But our questions about growth and debt still remain” and, despite the clarifications requested, “we have no answers to these questions. Where does the additional growth come from? Who will pay the cost of the increased expenses?“. “We continue to believe that this budget has risks for Italian citizens, businesses and taxpayers: we are making decisions in their interest”.
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Be careful though, the infringement procedure is not automatic. “It is up to the member states to express their point of view within the next two weeks,” Moscovici explained. At the same time, negotiations will be opened to avoid it. In the event that these are not successful either, the EU decision will become final on January 22 and it could take about a year for the sanctions to be imposed.
It should be emphasized that Italy was also the only country to receive a rejection. As for the other Member States, ten States compliant with the Stability and Growth Pact, three broadly in line, four at risk: Belgium, France, Portugal and Slovenia.
"The government is convinced of the validity of the maneuver: we will meet with Juncker on Saturday evening and I hope we will compare our positions". This is the comment of the premier, Joseph Conte. The maneuver will therefore not be modified, but Palazzo Chigi is ready to provide a detailed explanation of the objectives and parameters contained in the budget law to the president of the EU executive, Jean-Claude Juncker, in the meeting scheduled for Saturday 24 November, "at beyond the numbers". Because, he reiterates, "our economists consider it adequate". The explanation will be contained in a dossier of "many pages and very technical".
The Minister of Economy, Giovanni Tria, expressed his "regret" for the rejection of the maneuver in a note: "We remain convinced - explained Tria - that it ensures total control of our public finances within the limits of the moderate expansionary policy made necessary by the slowdown of the European economy and Italy” and which “guarantees the objective of reducing the debt-GDP ratio”.
"However, I believe that the dramatization of the dissent between Italy and the European Commission damages the Italian economy and consequently the European economy", concluded the minister.
“Has the letter from Brussels arrived? I'm also waiting for Santa Claus'. So the Deputy Prime Minister Matteo Salvini he replies to those who announced the arrival of the letter from Brussels for the opening of the infringement procedure. “We will discuss politely as we always have always done – he added – We will confront each other. I go ahead. If someone wants to convince me that Fornero is right, I'm not convinced."
More respect for the res publica and public money, on the part of the men/women of the state!