EU demands clarifications from Italy, France on budgets

23 October, 2019 12:00 AM printer

BRUSSELS: The European Commission on Tuesday demanded urgent clarifications from Italy and France on their budget plans for next year, worried they veer widely from spending cut commitments made to Brussels.

The letters from the EU's executive arm requested a response by Wednesday and could be the first step before the commission rejects a budget outright and demands a new draft.

Spain, Belgium and Finland were also contacted with concerns.

"Italy's plan does not comply with the debt reduction benchmark in 2020," said a letter signed by EU economics affairs commissioner Pierre Moscovici and commission vice president Valdis Dombrovskis, reports AFP.

Rome sent its budget on Wednesday hoping to get Brussels to agree to a deficit of 2.2 percent of GDP, which the EU said risked delaying the reduction of Rome's massive debt mountain.

The spending plans were the product of fraught negotiations between the new coalition in Italy, an unlikely partnership between the anti-establishment Five Star Movement and the centre-left Democratic Party.

"We will provide all clarifications to the EU, we are not concerned," said Italian Prime Minister Giuseppe Conte.

"It is a necessary dialogue with Brussels from which we will not escape".

France's government unveiled a draft 2020 budget last month with more than nine billion euros in tax cuts for households in its bid to move on from "yellow vest" protests while still cutting the deficit.

But the EU warned that these plans were "not in line" with commitments made to Brussels, and risked a "significant deviation" from the European rulebook on budgets.

The European Commission a year ago for the first time rejected a national budget when it turned down Italy's 2019 spending plans that were submitted by the populist far right coalition.

After loudly refusing to cave to Europe's demand, Rome later acquiesced and accepted the tighter spending and debt reduction demanded by Brussels.