The Eurogroup gives the first attention to Italy for its budget

The Eurogroup gives the first attention to Italy for its budget

Finance ministers warn that the rules are the same for all but wait to know the details of the accounts before deciding

The Italian Minister of Finance, Giovanni Tria, faces on Monday the first community blow to his project of Budgets for 2019, whose objective of public deficit (2.4%) has already triggered all the alarms. The euro zone economy ministers (Eurogroup), meeting in Luxembourg, expect to know the details of public accounts that deviate drastically from the budget path to which Rome had committed. The French Finance Minister, Bruno Le Maire, warned before the meeting that "the rules" are "the same for all" countries. Before meeting his counterparts, Tria has been terse: "We will tell you to be calm, now I will try to explain what is happening and how we will formulate the measures we are going to adopt".

MORE INFORMATION
Mattarella warns that government budgets challenge the Constitution
The markets punish the budget plan of the Italian Government but Brussels grants a truce
Salvini warns Brussels that will go ahead with their budgets
The clash with Brussels is expected from October 15, when the European Commissioner for Economic Affairs, Pierre Moscovici, will begin reviewing the budgets of countries in the euro zone. But community sources hope that at the meeting in Luxembourg the first sparks will come out, anticipating a conflict that will set fire to the coexistence of the coalition Government of 5 Stars and League with the rest of European partners. "At the moment, I only know that the Italian government will present a budget with a deficit of 2.4%, not only for next year, but for the next three," said Moscovici, who recalled that it is " significant deviation "with respect to the" committed ".

The Italian Finance Minister arrives at the Eurogroup with very damaged credibility after having announced to Brussels a contained budget that has been ruined by the expansive demands of the 5-star leader, Luigi di Maio. "Tria gave us a deficit of 1.6% , then raised it to 1.9% and ended up accepting 2.4% ", European sources are surprised. "Italy is going to be the only country in the euro zone with an expansive budget in 2019, despite the fact that it is the second country with the most debt, after Greece", lament those sources.

The appointment of this Monday will be the first trial and it is expected that the toughest ministers, such as those of Germany and Holland, reproach the Italian budget slippage. Much of the Eurogroup, chaired by the Portuguese socialist Mario Centeno, hopes to avoid an open war with Rome and trusts that the internal pressure - the president of the Republic has called the budget unconstitutional - and external - the risk premium rebounded the week last - oblige Giuseppe Conte's executive to correct his numbers. "Italy is not on the agenda of the Eurogroup", Centeno has downgraded, who has still admitted that Di Maio's executive accounts are "on everyone's head". "We all have issues and we expect answers," he said.

Spain rules out the 'contagion effect'
In spite of not being a point of the day in the Eurogroup, all the ministers have affirmed that they wait to hear the explanations of Tria. The most forceful has been the French Le Maire. "I want to be very clear: the rules are the same for everyone because our futures are united," he said. His Finnish counterpart, Petteri Orpo, has agreed: "The rules are for everyone, we are all in the euro zone and it is important that they develop their role".

The rise in profitability demanded of the Italian debt after knowing the objectives with which the Italian executive works has put other countries on guard. By mid-afternoon on Monday, the return that the markets demand for the 10-year Italian bond continued to rise. But the debts of France and Spain also followed that path. The Minister of Economy, Nadia Calviño, has argued that the Government follows "with great attention" the "situation of Italy and the capital markets" but has been emphatic that its executive is "committed" to reducing the deficit and debt public. "I do not have a special concern for a contagion effect," he added.

Otherwise, Brussels could issue a negative opinion on a draft Budget for the first time. A qualification that would not prevent the Italian Parliament from approving the accounts but that would mean an escalation of tension with the community authorities. Brussels does not want that head-on collision just six months before the European Parliament elections (May 2019). But the leader of the League, Matteo Salvini, little enthusiastic about the expansive budget, may be interested in tightening the rope to kill two birds with one stone: to charge Di Maio's bills and blame the community bureaucracy.

Italy clings to the precedent of France, which has submitted a draft budget with a 2.8% expected deficit. But Brussels reminds that this figure is due to a cyclical accounting impact, compatible with a structural adjustment of 0.3%. Spain, whose budgets are still in the air, also aspires to a similar adjustment (0.4%).

The budget driven by 5 Stars, however, not only renounces all structural adjustment but contemplates an expansion equivalent to 0.75%. And for Brussels scandal, aims to maintain the same pace for three years.

If Rome went ahead, the Commission, in addition to being able to object - not to veto - budgets, has another bullet in the chamber. The threat of a disciplinary procedure for breaching the debt reduction, a breach hitherto accepted by the EU, hangs over Italy.

Brussels is scheduled to issue its new verdict on the Italian debt in May 2019. And may not be as benevolent as in previous years if the Italian government ignores the notices that will begin to receive from this Monday.