Rome and Brussels Resume Collision Course

ItalyEU2, cc Ewan Topping, modified, flickr, https://creativecommons.org/licenses/by/2.0/

Summary

The new Italian government had its budgetary work cut out for it from the very beginning, with one coalition partner pulling for expansive new welfare spending and the other sweeping tax cuts. Looming over them was Italy’s mountain of debt, which has now more than doubled the size of the economy and is expected to reach 133.7% of GDP by the end of the year before growing further to 135% in 2020.

Rome’s blasé attitude toward its debt pile riled officials in Brussels, but the two sides hammered out an agreement to avoid punitive measures last year.

Now this agreement has collapsed under the combined strains of woeful economic data and pushback against Brussels-imposed austerity from the Salvini government. Earlier this week, the European Commission initiated an excessive deficit procedure against Italy, citing a lack of necessary structural reforms. In the unlikely event the glacial-paced sanctioning process is actually culminated, Italy could be facing up to 3.5 billion euros in fines.

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