Tension between Italy and the European Commission over draft national budget for 2019

Summary:

Reports and analysis of the tension between the European Commission and the Italian government over the country's draft budgetary plans for 2019.

Further information:

Italy's government submitted its draft 2019 budget to the European Commission on 15 October 2018. The document includes plans to increase spending and bring austerity policies to an end. The European Commission warned the country on 18 October against the policy options laid out in the draft budget plans and demanded a set of 'clarifications' over its deviation from the fiscal goals set out by the Commission for Italy.

On 22 October, the Italian government vowed to maintain its spending plans. This resulted in an official rejection by the European Commission on the following day of the proposed budget for 2019, which requested the Italian government to review its draft budget plans. The country's cabinet vowed on 14 November to stick to the initial plans, in what was seen by analysts as a sign of defiance. The Commission identified on 21 November the need to launch an excessive deficit procedure (EDP) against Italy due to what they consider to be a serious danger of infringement of EU fiscal rules. However, media reports on 19 December suggested an agreement had been reached between the Italian authorities and the European Commission the draft budgetary plans for 2019. It was eventually endorsed by the country's bicameral Parliament later in the month.

The Commission put forward in 2015 a set of guidelines on the implementation of the Stability and Growth Pact (SGP), which resulted in a 'Commonly agreed position on Flexibility within the Stability and Growth Pact' later endorsed by the Council of the European Union.

Official

European Commission: European Commission Opinion on the 2019 draft budgetary plan of Italy http://europa.eu/rapid/press-release_MEMO-18-6175_en.htm

European Commission: Press Release, 23.10.18: European Commission requests that Italy presents a revised draft budgetary plan for 2019 http://europa.eu/rapid/press-release_IP-18-6174_en.htm

European Commission: Vice-President Valdis Dombrovskis: College read-out and remarks on the Italian budget, 19 December 2018 http://europa.eu/rapid/press-release_SPEECH-18-6886_en.htm

European Commission: Commissioner Pierre Moscovici: College read-out and remarks on the Italian budget, 19 December 2018 http://europa.eu/rapid/press-release_SPEECH-18-6885_en.htm

---

News

EurActiv, 25.10.18: Draghi ‘confident’ about a deal on Italian budget https://www.euractiv.com/section/economy-jobs/news/draghi-confident-about-a-deal-on-italian-budget/

Politico, 22.10.18: Italy tells Commission it won’t revise budget plan https://www.politico.eu/article/update-italy-tells-commission-it-wont-revise-budget-plan/

EurActiv, 23.10.18: Commission rejects Italian draft budget in unprecedented decision https://www.euractiv.com/section/economic-governance/news/commission-rejects-italian-draft-budget-in-unprecedented-decision/

The New York Times, 23.10.18: E.U. Rejects Italy’s Budget, and Populists Dig In https://www.nytimes.com/2018/10/23/world/europe/italy-budget-eu.html

The Guardian, 27.09.18: Italy agrees high public spending reforms in potential clash with EU https://www.theguardian.com/business/2018/sep/27/the-euro-and-stock-markets-fall-amid-italy-budget-fears

The Guardian, 13.11.18: Italy defies EU request to present revised budget https://www.theguardian.com/world/2018/nov/13/italy-expected-defy-eu-request-present-revised-budget

EurActiv, 22.10.18: Italian populist government braces for EU budget rejection https://www.euractiv.com/section/economy-jobs/news/italian-populist-government-braces-for-eu-budget-rejection/

The Local (Italy), 19.10.18: EU slams Italy's 'unprecedented' breaking of budget rules https://www.thelocal.it/20181019/eu-slams-italys-unprecedented-breaking-of-budget-rules

Corriere Della Sera, 18.10.18: Concessions on tax arrears in newly approved finance law https://www.corriere.it/english/18_ottobre_17/concessions-on-tax-arrears-newly-approved-finance-law-0712cbdc-d182-11e8-81a5-27b20bf95b8c.shtml

The Local (Italy), 22.10.18: Italy tells EU it will stick to big-spending budget https://www.thelocal.it/20181022/italy-tells-eu-it-will-stick-to-big-spending-budget

BBC News, 14.11.18: Rome rejects European Commission demands https://www.bbc.co.uk/news/world-europe-46203605

The Local (Italy), 14.11.18: Italy risks EU sanctions by sticking to debt-happy budget https://www.thelocal.it/20181114/italy-risks-eu-sanctions-by-sticking-to-debt-happy-budget

Reuters, 14.11.18: Defiant Italy sets stage for budget showdown with EU https://uk.reuters.com/article/idUKKCN1NJ0ZR

The Local (Italy), 21.11.18: Italy is 'sleepwalking into instability': EU recommends sanctions over budget https://www.thelocal.it/20181121/italy-sleepwalking-into-instability-eu-italian-budget-sanctions

Bloomberg, 21.11.18: EU Takes First Step Toward Fining Italy on Budget https://www.bloomberg.com/news/articles/2018-11-21/salvini-seen-open-to-compromise-on-budget-italy-update

BBC News, 26.11.18: Italy budget: Rome vows to stick to plans, despite EU concerns https://www.bbc.co.uk/news/world-europe-46343033

The Guardian, 21.11.18: Matteo Salvini ready to ‘confront EU’ after Italy’s budget rejected again https://www.theguardian.com/world/2018/nov/21/mattei-salvini-ready-to-confront-eu-after-italys-budget-rejected-again-italy-european-commission

EurActiv, 21.11.18: Commission launches excessive deficit procedure against Italy, saying it is ‘sleepwalking into instability’ https://www.euractiv.com/section/economic-governance/news/italy-sleepwalks-to-instability-commission-resorts-to-excessive-deficit-procedure/

BBC News, 19.12.18: Italy budget deal struck with Europe after months-long row https://www.bbc.co.uk/news/world-europe-46620853

The Guardian, 19.12.18: Italy avoids EU sanctions after reaching 2019 budget agreement https://www.theguardian.com/world/2018/dec/19/italy-avoids-eu-sanctions-after-reaching-2019-budget-agreement

Politico, 19.12.18: Fears of Euroskepticism blunt Brussels’ budget threats against Rome https://www.politico.eu/article/fears-of-euroskepticism-blunt-commission-budget-threats-against-rome-salvini-juncker/

Euronews, 19.12.18: Italy Italy budget crisis averted after EU agreement https://www.euronews.com/2018/12/19/italy-budget-crisis-averted-after-eu-agreement

EurActiv, 19.12.18: Salvini says Commission approved the Italian budget https://www.euractiv.com/section/economy-jobs/news/salvini-says-commission-approved-the-italian-budget/

The New York Times, 19.12.18: Italy and E.U. Reach a Budget Deal, as Populist Plan Runs Into Reality https://www.nytimes.com/2018/12/19/world/europe/italy-eu-budget.html

The Local (Italy), 30.12.18: Italian MPs approve revised budget after EU standoff https://www.thelocal.it/20181230/italian-mps-approve-revised-budget-after-eu-standoff

The Independent, 30.12.18: Parliament backs lowering retirement age and new basic income after standoff with EU https://www.independent.co.uk/news/world/europe/italy-budget-basic-income-retirement-age-lowered-tax-cuts-spending-five-star-league-a8704081.html

Reuters, 29.12.18: Italian parliament passes budget in confidence vote, after EU deal https://uk.reuters.com/article/idUKKCN1OS0N7

Bloomberg, 30.12.18: Italy's Populists Win Budget Battle, But Wars Loom in 2019 https://www.bloomberg.com/news/articles/2018-12-30/italy-s-populists-win-budget-battle-but-big-wars-loom-in-2019

---

Commentary and Analysis

Verfassungsblog, 27.10.18: The Italian Budget Drama – Brussels and Rome on Collision Course https://verfassungsblog.de/the-italian-budget-drama-brussels-and-rome-on-collision-course/

The Conversation, 05.06.18: Italy’s new government is on a collision course with EU fiscal rules – it’s time for eurozone reform https://theconversation.com/italys-new-government-is-on-a-collision-course-with-eu-fiscal-rules-its-time-for-eurozone-reform-97715

LSE European Institute: EuroppBlog, 27.10.18: From ‘Vincolo Esterno’ to ‘Nemico Esterno’: The disturbing new demonisation of the EU http://blogs.lse.ac.uk/europpblog/2018/10/27/from-vincolo-esterno-to-nemico-esterno-the-disturbing-new-demonisation-of-the-eu/

EUObserver, 19.10.18: What Italy's budget row is actually about https://euobserver.com/economic/143170

The Economist, 08.11.18: Why Italy’s budget has caused a European row https://www.economist.com/the-economist-explains/2018/11/08/why-italys-budget-has-caused-a-european-row

Bruegel: Director’s Cut: The Italian government budget proposal for 2019 http://bruegel.org/2018/09/directors-cut-the-italian-government-budget-proposal-for-2019/

Euro|topics: EU-Italy budget row https://www.eurotopics.net/en/209816/eu-italy-budget-row

The Economist, 15.11.18: A defiant Italy puts Europe’s fiscal rules to the test https://www.economist.com/europe/2018/11/15/a-defiant-italy-puts-europes-fiscal-rules-to-the-test

Bloomberg, 14.11.18: Don’t Let Italy Block Euro-Zone Reform https://www.bloomberg.com/opinion/articles/2018-11-19/china-stimulus-efforts-are-failing-for-good-reason

Foreign Policy, 14.11.18: Europe Should Let Italy Win https://foreignpolicy.com/2018/11/14/europe-should-let-italy-win/

Euro|topics, November 2018: Brussels cracks down on Rome over deficit https://www.eurotopics.net/en/210402/

Euro|topics, December 2018: Why is the EU not punishing Rome? https://www.eurotopics.net/en/212058/

---