Published: Sun, October 21, 2018
Worldwide | By Jermaine Blake

Italy's Salvini dismisses ratings downgrade, says outlook 'stable'

Italy's Salvini dismisses ratings downgrade, says outlook 'stable'

The European Commission formally warned Italy late Thursday that its budget plans for 2019 are a serious concern, launching a high-stakes process that could see Rome hit with unprecedented sanctions for breaking commitments to Brussels.

Ahead of the meeting, Italy had on Wednesday insisted it would not budge on the budget, putting Rome squarely on course for a clash with Brussels.

Italy's deficit is now projected at 2.4 percent of GDP, far higher than the 0.8 percent estimate given by the earlier center-right government.

Barclays' analysts also said the European Union is likely to make a substantial effort to bring Italy in line with the Eurozone's fiscal rules in the coming weeks.

The letter stated that Italy's budget proposal, which was initially announced in September was in contravention of the EU's budget regulations.

Moscovici said Italy would be treated like any other member state, adding: "I can not imagine a Europe without Italy or Italy without Europe".

Italy's budget problems have been exacerbated over the past 18 month as the government in Rome has been gradually increasing its spending amid a lengthy political struggle, the ongoing influx of African migrants, and structural setbacks in the national economy. The agency rates Italy's debt "BBB" with a stable outlook, following an upgrade from "BBB-" last October.

Conte, in a post on Facebook Thursday, said that the measures are "well-considered, well-constructed and well-realized", and he said the draft was "the only instrument that we have to ensure economic growth and social development to our country".

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"The EU is an economic and values-based community and works because there are common rules that everybody has to keep to", Kurz said. The increase suggests investors are more nervousness about the impending budget showdown with the EU.

In its review of Rome's budgetary plans, the EU Commission can raise concerns until Monday.

But Italy is one of the 19 European nations that use the joint euro currency, and its eurozone partners have demanded that it give up plans that will push its deficit up to 2.4 percent of gross domestic product — three times higher than promised by the previous Italian government.

"I had some colleagues on the phone say they don't want us to add flexibility to already existing flexibility", he said, adding that the European Union has no intention of doing so. The 5-Star Movement opposes such a move, fearing possible money laundering.

Matteo Salvini, the leader of the League party, called the accusation "surreal".

The Italian government's brash attitude towards public spending has spooked financial markets, with many fearing a re-run of the debt crisis that almost saw Greece kicked out of the eurozone.

On the sidelines of the summit, Conte met with Dutch Prime Minister Mark Rutte and Chancellor Angela Merkel of Germany, both of whom have taken a hard line on the state of Italy's finances.

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