Italy and EU set for fresh battle over budget.

The Italian government is playing a bigger political game with EU

Italy and EU set for fresh battle over budget. 1Politico reports that the European Commission remains on track to kick-start a disciplinary process against Italy next week after it refused to alter its spending plans.
Three weeks after Brussels rejected Rome’s draft budget plan for 2019, the Italian government on Tuesday night officially said it will not rework it as demanded. The confrontation could ultimately lead to an unprecedented sanction of a member country by the EU’s executive arm for flouting the bloc’s fiscal rules.
The Commission still intends to issue a damning report that could open a so-called excessive deficit procedure (EDP) against Italy, according to a person with knowledge of the discussion in Brussels. But Italy’s populist government hardly seems worried — and may actually be relishing the standoff.
In a letter sent late Tuesday to Economic Affairs Commissioner Pierre Moscovici and Vice President Valdis Dombrovskis, Italy’s Finance Minister Giovanni Tria explained that the government’s budget deficit target at 2.4 percent of GDP in 2019 won’t change — but that safety clauses could be introduced to make sure there’s no overshooting.

The Telegraph reports that the coalition, made up of the anti-establishment Five Star Movement and the populist, nationalist League, is in no mood to compromise and knows that bashing Brussels goes down well with many voters, as European Parliament elections loom in May. “We’re working on a budget that will guarantee jobs, greater rights to pensions and less taxes for many Italians. If Europe likes it, we’ll be happy, but if not we’ll plough on regardless,” said Mr Salvini, who is Interior Minister and also Deputy Prime Minister. “I can assure you, we will not budge a millimetre.” This could become a bigger problem for Europe than Brexit.

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