For the first time ever, a Member State has been told by the European Commission to revise its budget plan.

The reason behind this action is Italy’s will to raise its spendings when its government debt already is the second highest in the EU. As such, the Commission deemed that this first draft does not comply with its recommendations.

The new government of Italy wanted to fulfill key promises of its last election campaign. This includes measures such as the introduction of a minimum income for the unemployed, tax cuts and removing extensions to the retirement age, all in order to reduce poverty. The problem is that the budget deficit targeted by the government is three times higher than the one of the previous government. Valdis Dombrovskis, the Commission Vice-President for the Euro, said : « For the first time the Commission is obliged to request a euro area country to revise its draft budgetary plan but we see no alternative than to request the Italian authorities to do so. »

It could be argued that Italy’s target of 2.4% of the GDP is below the 3% deficit limit under the Eurozone rules. The Italian government considers these measures necessary to kick-start growth and won’t back down on its decision. As a consequence, this situation might cause another tumult in the political landscape of the European Union.

Güray Serbest

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