The European Commission has rejected Italy’s budget, saying it had “no alternative” but to demand changes after Italy projected a deficit of 2.4% of GDP — triple the EU mandated target of 0.8%. It’s the first time the EU has failed to endorse a member state’s draft budget. Prime Minister Giuseppe Conte, whose government has been given three weeks to submit a new proposal, says there is “no Plan B”.
'Synopsis 1. Italy owes creditors, primarily Germany, nearly 500 billion Euros. 2. The more pressure the EU puts on Italy, the higher Italian bond yields are likely to rise. 3. The higher Italian bond yields rise, the more likely debt downgrades will come. Moody's currently has Italy just one notch above junk. 4. If Italy is downgraded to junk, its bonds can no longer be used as collateral for ECB support. 5. Lega and M5S will blame Brussels and the ECB, and the Italian people will likely buy that story.' #italian #economy https://lnkd.in/e3RJaD7
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The European Commission, the EU's executive arm, told populist lawmakers in Italy that it must make revisions to its draft budget proposal. Rancor between Rome and Brussels has grown in recent weeks after a controversial draft Italian budget for 2019 proposed a deficit equal to 2.4 percent of the country's annual output. A previous Italian administration had promised a deficit goal of just 0.8 percent of GDP (gross domestic product). In a press statement in Strasbourg, the European Commission Vice-President for the Euro and Social Dialogue Valdis Dombrovskis said there was no alternative but to reject Italy's current proposals, before adding that the country's government now had three weeks to come up with another plan.
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What is going on the world... EU rejects Italian draft budget, setting up standoff with defiant Italy - The European Commission rejected Italy's draft 2019 budget on Tuesday, saying it brazenly broke EU rules on public spending, and asked Rome to submit a new one within three weeks or face disciplinary action.
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Good morning. While Italy (and the markets) await the EU's official reaction to the country's budget proposal, this series of charts from the Financial Times illustrates why the issue is beyond the deficit and debt per se and speaks importantly to growth ... and the risk that "expansionary measures fail to deliver the projected growth." https://lnkd.in/erh89Zq #FT #economy #markets #EU #growth