Italy’s Prime Minister Giuseppe Conte has stood up for the country’s big-spending budget, running counter to the EU's fiscal rules. Conte has stuck to the plan for 2019, according to which the deficit would not exceed 2.4 % of Italy's gross domestic product (GDP). This budget is designed to stimulate economic growth.
Despite the growing standoff between the Italian government and the European Commission, Conte has called for a constructive dialogue with the bloc and dismissed suggestions that Italy may eventually exit the Eurozone.
"Read my lips: for Italy there is no chance of Italexit, to get out of Europe or the Eurozone," he told journalists.
The budget cuts taxes and increases welfare spending, in accordance with the campaign promises of the two parties which formed the government this year, the anti-establishment 5 Star Movement and the right-leaning anti-immigration Lega party. Conte insists that growth would "take off" as a result of these reforms.
However, the proposed budget falls foul of the accord between the European Union and Italy’s former government, as the deficit is three times the agreed-upon limit, breaking the EU's fiscal rules. The European Commission, concerned with Rome’s disobedience, is to decide on its plan of actions towards Italy during a meeting on October 23.
The European Commission slammed Italy’s proposed budget as an unprecedented breach of EU rules in a letter last week. Brussels also demanded an explanation from Rome. The Wall Street Journal described it as the beginning of a formal procedure that could end with Italy being punished by the bloc. The EU could eventually reject the budget plan and impose fines on the country.