EURO ON BRINK: Italy budget plans could SINK single currency – ‘sleepwalking into CRISIS’
ITALY and the eurozone could “sleepwalk into a crisis” which would threaten the existence of the single currency if Rome pushes ahead with its controversial budget plans, senior officials have warned.
By HARVEY GAVIN
Express.co.uk
Thu, Oct 4, 2018
Italy’s populist government has pledged to flout Brussels’ rules and borrow more despite already being lumbered with an eye-watering £2trillion (€2.3trillion) of national debt.
The extra cash would help the ruling coalition in Rome – made up of the anti-establishment 5-Star Movement and right-wing League – make good on its election promises, including tax cuts, increased welfare and a lowering of the retirement age.
But the proposals have been branded “insane” and “ludicrous” by senior eurozone officials who say a financial collapse in Italy would leave the country beyond the help of a bailout.
And they warned a crisis in the Mediterranean nation – which is the EU’s fourth biggest economy – could bring the single currency down with it.
Italian Economy Minister Giovanni Tria this week presented Rome’s budget plans for 2019 to 2021 to the Eurogroup, a panel of eurozone finance ministers.
Mr Tria revealed Italy wants to triple the 2019 budget deficit plan drawn up by the previous government to 2.4 percent of gross domestic product – and keep it at that level until 2021.
The draft budget flies in the face of EU fiscal rules which state that Italy must cut its debt every year and turn its deficit into a surplus.
One senior euro zone official told Reuters: “When Tria talked about planning a deficit of 2.4 percent for the next three years in the Eurogroup, jaws dropped everywhere.
“The mood was that this was really a terrible signal.”
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