The leaders of Italy’s ruling populist parties have backed down from a fight with the European Commission over their 2019 budget.
Luigi Di Maio, the labor minister and leader of the Five Star Movement, and Matteo Salvini, the interior minister and leader of the far-right League, said after a meeting on Sunday that they had given their blessing to Prime Minister Giuseppe Conte’s revised spending plan, which reduces next year’s shortfall from 2.4 to 2 percent of GDP. Read more
The European Commission has told Italy to revise its budget for 2019, accusing it of “openly and consciously” reneging on the commitments it has made.
This has been reported as the commission “rejecting” Italy’s budget proposal, but that is too strong a term. It has no such power.
Here is what’s really going on — and what is likely to happen next. Read more
I cheered too soon. A few weeks ago, I reported that Italy’s populists were coming to terms with reality. Now they have introduced a spending plan that puts them on a collision course with the European Commission and financial markets.
Reneging on the commitment of the last government, the coalition of the anti-establishment Five Star Movement and far-right League, formed four months ago, proposes to run a deficit equal to 2.4 percent of GDP in 2019.
That is still below the EU’s 3-percent ceiling, but it is a reversal of the fiscal consolidation path followed so far and it means Italy’s public debt, already one of the highest in the world at 130 percent of GDP, will rise rather than fall. Read more
Italy’s ruling Five Star Movement and League have shelved proposals for a universal basic income and flat tax, La Stampa reports.
Implementing either policy, let alone both, would have blown a hole in Italy’s public finances and broken the EU’s 3-percent deficit ceiling. Read more
My latest post for the Atlantic Council’s New Atlanticist blog previews next week’s meeting between American president Donald Trump and Italian prime minister Giuseppe Conte.
Although the leaders got along well at the recent G7 and NATO summits, and share views on immigration, international relations and trade, I wouldn’t be surprised if the meeting turned out to be a disappointment.
On both military spending and trade — Trump’s pet peeves when it comes to Europe — Conte’s government opposes the American president. Read more
Italy’s ruling populists claim to have made good on their campaign promise to overturn the previous government’s labor reforms.
A decree:
Italy’s National Institute for Social Security estimates that 8,000 temp workers could lose their jobs as a result of the changes, but the Five Star Movement and League have dismissed these figures as “unscientific” and “disputable”.
In the last year, Italy has added close to 460,000 jobs, 95 percent of which are on temporary contracts. Read more
Italy’s far-right League is benefiting the most from the government deal it struck with the populist Five Star Movement earlier this month.