European finance ministers urged Italy on Monday to respond to European Commission demands that it submit a new budget plan after the EU’s executive wing rejected Rome’s original spending package.
The Commission supervises EU countries’ budget plans and it believes that the blueprint submitted by Italy’s populist government for next year is not in line with the rules and breaks Rome’s promises to lower public debt.
Arriving to chair a meeting of finance ministers from the 19 countries using the euro, Mario Centeno said he hopes Italy will take steps to bring the plan “in line with our fiscal rules.”
French Finance Minister Bruno Le Maire said: “We share the evaluation of the European Commission. Above all, the European Commission is extending a hand to Italy and I would like Italy to grasp that hand.”
Italy’s debt load is the second highest in Europe, after Greece. Many are concerned about new financial turmoil in Europe should Italy lose control of its finances, but the government says a sharp increase in spending is needed to jumpstart economic growth.EU Economy Commissioner Pierre Moscovici recalled that Italy has until Nov. 13 to submit a new budget plan. The Commission will rule on that plan, as well as the others in Europe, on Nov. 21.
“When a member does not respect the rules it has an impact on the others,” Moscovici said.
Asked whether some deal or compromise could be found between Brussels and Rome, Moscovici said: “No. We’re not in a negotiation. We’re not in a discussion. The rules are the rules.”
He recalled that the cost of servicing Italian public debt is already equal to the country’s entire spending on education – 65 billion euros ($74 billion) a year, or about 1,000 euros per citizen.
The budget dispute leaves many uneasy. EU countries have agreed to allow the Commission to supervise their budget plans and take legal steps against those who refuse. But countries still determine their spending priorities and Italy’s government appears determined to go its own way.
Dutch Finance Minister Wopke Hoekstra backed the budget supervision process but he would not speculate about what Italy might do or what response might be needed if it refuses to submit a new plan.
“This is a dialogue between the Commission and Italy. The Commission has rejected the Italian budget. It is now up to Italy to respond,” he told reporters.