Italy accuses Brussels of ‘Economic Terrorism’ as it sticks by budget proposals

europa.eu -Portuguese Fin Min Mário Centeno President of the Eurogroup. Also Chair of the Board of Governors of the European Stability Mechanism.

DW — A war of words between the EU and Italy over its budget plan escalated on Monday, as Brussels reminded the government in Rome that its proposal must meet the bloc’s rules. The future of the euro could be at stake.

Italy accused the EU of “economic terrorism,” as its row with economic leaders in the bloc deepened on Monday. EU finance ministers warned Italy that it must abide by EU rules on public spending.
Italy upset Brussels when it set a 2.4 deficit on its budget for the next two years, well below the 3% limit demanded by the EU rules but above the recommended limit of 0.8 required for Italy to start reducing its national debt. The proposed deficit is three times the previous administration’s austerity target (probably the reason that the previous government was voted out of office) and has left the euro struggling as a result.

There are European institutions playing at bringing terrorism to the financial markets,” said Italy’s Deputy Prime Minister Luigi Di Maio who heads the Five Star Movement (M5S) adding that there was “no doubt” the leaders of France and Germany wanted the Italian government to fall.

Italy’s budget plans to set aside €10 billion to pay a ‘citizen’s income’ of €780 a month for 6.5 million of the poorest Italian families, reduce taxes and delay pension age increases.

The proposal has also bred ‘market anxiety’ and sparked fears of an Italian debt crisis. The country’s public debt stands at 132 per cent of gross domestic product, the second-highest debt-to-GDP ratio in the eurozone after Greece.

“It is up to the Italian government to show that it has a sustainable and credible budgetary plan,” said Eurogroup chief and Portugal’s finance minister Mario Centeno.

European Commission President Jean-Claude Juncker said late Monday that Italy must be treated “strictly and fairly” to prevent a new crisis.

“One crisis was enough, and we have to prevent Italy from being able to get a special treatment here that, if everybody were to get it, would mean the end of the euro,” Juncker said.

Italy’s Interior Minister Matteo Salvini rejected the remarks and remained defiant. “In Italy, nobody is buying the threats of Juncker, who is now comparing our country to Greece,” he said.

Salvini defended the proposal saying it his government merely sought to prioritize people’s rights to work, security and health.

EU Economic Affairs Commissioner Pierre Moscovici will be responsible with evaluating Italy’s new budget, which is set to be submitted to Brussels on October 15.

Rome could face punitive measures by its EU partners if it goes through with a budget plan that breaks the bloc rules on running excessive deficits and high debt.