Daily Management Review

The EC recommends starting penalty procedure against Italy


06/07/2019


The European Commission (EC) recommended starting the penalty procedure against Italy due to the violation of the European Stability Pact. In connection with the further deterioration of the budget situation in Italy, the EC considers it justifiable to begin the punitive procedure against this country, the European Commission said in a statement.



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EU countries now have two weeks to study EC claims. If the finance ministers of the EU states come to a similar conclusion, the European Commission can launch the penalty procedure against Italy. In this case, Italy will be subject to a series of requirements to reduce public debt. If Rome ignores them, then a multi-billion dollar fine of up to 0.2 percent of GDP can be imposed on Italy. Such a punishment has not yet been imposed on any European state.

The financial situation in Italy last year was problematic in two areas, but instead of reducing the amount of public debt, the government only added to it. Rome also did not follow the budget recommendations of its partners in the euro zone, said EU Commissioner for Economy Pierre Moscovisi.

He noted that in 2020, the state budget deficit in Italy is projected to be 3.5 percent of GDP, which is half a percent higher than the allowable one and the national debt will rise to 135.7 percent.

Italy takes the second place in the EU in terms of national debt after Greece. In absolute terms, it exceeds €2.3 trillion.

The third largest economy in the eurozone, is now ruled by a coalition consisting of the right-wing populist 5 Star Movement and the xenophobic League of the North. During the election campaign, they promised to abandon the policy of economy, increase allocations for social needs and reduce taxes.

source: dw.de






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