Latest figures released this week from the European Commission earlier this week predicted Italy will once again breach European Union deficit rules next year, setting Rome and Brussels on a collision course for the next budget. The Southern European country and top Eurocrats have been engaged in a long battle of wills over the dire economic conditions Italy is in, with the populist Government vocally opposing the oversight of the EU. But eurozone expert Eleonora Poli suggested Brussels will avoid putting pressure on the strategic member state to protect the monetary union.

Speaking to, Dr Poli said: “What would happen in the case of another recession would certainly affect other member countries because other member countries’ banks or companies already invested in Italy.

“Many people have already said Italy is too big to fail but also too big to be saved. It’s not Greece, it’s not Spain, we are still one of the biggest economies in the eurozone.

“There is no interest, not even in other European countries, for Italy to fail because this would imply economic losses in many other countries and many other foreign companies.”

The Italian deficit is expected to balloon to 3.5 percent of the gross domestic product (GDP), well over the 3 percent limit imposed by the EU. The European Commission also expects the country, the third-largest economy in the eurozone, to have the slowest economic growth in 2020.

READ MORE: EU CRISIS: Italy to provoke major Brussels clash for HUGE breach of Euro budget rules

The populist government led by Prime Minister Giuseppe Conte has put forward new socio-economic reforms to appeal to Italian voters unhappy with the austerity rules imposed from Brussels following the 2008 financial crisis.

Dr Poli continued: “This populist government is trying to provide an answer to the needs of citizens by creating more social guarantees, like basic income, and also a system of a flat tax for small and medium-sized business.

“On the one hand, they are implementing those reforms because people are asking for that, but on the other, they are not considering that Italy is already in a bad economic and financial shape.”

The European Commission has said it would assess Rome’s compliance with EU fiscal rules, including the requirement to cut debt, in June.

Brussels has said eurocrats would take into account the final debt data released earlier this week and Italy’s report on fiscal plans for the next three years.

EU economics commissioner Pierre Moscovici said the new EU forecasts, due on 7 May, will acknowledge the current economic slowdown.

Capital Economics analyst Jack Allen warned how the Italian economy is at risk of remaining static, with further repercussions for the entire eurozone.

He said: “Italy’s economy is essentially going to flatline in the medium term.

“This would be a bigger problem than the previous eurozone crisis and could once again endanger the single currency itself.”

The Italian government has previously stated they will attempt to lift the economy in the second half of the year by a stimulus package that includes tax breaks on investments, lower property taxes on factories and warehouses, and simplified procedures for public tenders.

The government will update its targets again in September.



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