After Italy refused to remedy its national budget that is likely to make its debt burden worse, the EU has decided to take strong steps as a damage control measure to ensure that it adheres to norms. The EU first expressed its displeasure by rejecting the draft budget presented by the EU’s populist parties that had far more deficit of 2.4 % than prescribed by EU which is 0.8 %. But a belligerent Italy insisted that it would stick to the budget as it had promised to help its citizens with welfare measure. In view of this development EU said formal sanctions would be taken against Italy for serious non-compliance with fiscal recommendations as the nation was literally walking towards instability.
EU Vice President Valdis Dombrovskis stated that appropriate disciplinary steps called excessive deficit procedure would be taken against Italy. They had already warned Italy’s government that their populist measures outlined in the draft budget would cause instability in the entire block but they had failed to carry out necessary steps to trim the budget. Under the rules of EU’s sanction procedure a fine of 0.2 % of GDP and half of any development funds would have to be paid by Italy. Both these fines could amount to billions of euros for the country.
But as the process is long and tedious, Mr. Dombrovskis said that he was open to discussion for diffusing the problem but Italy’s Dy Prime Minister Matteo Salvini told reporters that he is convinced about the success of their budget. Italian Prime Minister Guiseppe Conte will meet the Commission president Jean Claude Junker this weekend to highlight effectiveness and strength of the budget. The current government of Italy was established in early part of 2018 and its budget presented in September that had a deficit of 2.4 % of national GDP for financing its welfare schemes.