Sputnik: How could the EU punish Italy for defying its financial regulations?
James Newell: There was a meeting last night between Salvini and Di Maio; the Prime Minister and the Minister of Finance and it looks as though they are talking now in terms of cutting the budget deficit by 0.2%, so all the indications are at the moment that some kind of agreement can be reached.
I think they would like to find an agreement if they possibly can; although I think particularly on the side of the Italian government, they really need to find an agreement because an opinion poll came out last night which suggested 61% of Italians think that there really should be an agreement and a showdown avoided.
Ultimately; public opinion doesn't feel terribly strongly about these issues which are technical matters that are difficult to understand, but it would be will react to sell a showdown to the public, so if they possibly can reach an agreement then I think they will.
James Newell: The current level of debt stands at over 130%; the budget that's currently being proposed wouldn't do anything to reduce that. The danger is that if the debt gets too high; it becomes much more expensive to service, interest rates go up and that then has a knock on effect on the entire Italian economy, for ordinary consumers, for firms looking to borrow money to invest and the situation becomes very difficult indeed. So yes; it would be a very significant problem.
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