The European Commission warned Italy there would be serious consequences over its public finances unless Rome can explain how it plans to reign in spending and lower their deficit forecast. A spokesman for Prime Minister Giuseppe Conte told Italian newspaper Il Sole 24 Ore that a letter has been sent back to the Commission, asking the EU to review finance rules that govern the union. The letter also confirmed Italy’s commitment to respecting European regulation when it comes to maintaining levels of debt. The Commission has urged Rome to make its debt more sustainable by cutting its structural deficit.
Italian debt now stands at 132 percent, and is the second largest in the eurozone after Greece.
The Commission forecast this figure will rise further to 135 percent next year.
The Italian cabinet met last night to discuss the content of the letter, with Il Sole reporting how the government plans to avoid disciplinary action by using £4.5billion (€5.2billion) in expected improvements in its 2019 budget.
Italy is pledging to reduce its forecast deficit by using expected savings on forecast expenditure of about £1.7billion (€2billion) and higher-than-expected revenues of £2.8billion (€3.2billion), sources told the newspaper.
The newspaper said: “The package decided yesterday, in summary, is worth €5.2 billion in 2019 and would bring the deficit for this year to 2.2 percent (of gross domestic product)…”
Meanwhile, the Italian eurosceptic League party has drawn up plans for a so-called ‘mini-BOT’ scheme, which would see small-denomination treasury bills issued as a means of reducing state arrears to suppliers.
Critics claim this would effectively create a parallel currency to run alongside the euro, with one analyst suggesting the programme could dent confidence in the Italian economy.
The ‘mini-BOT’ scheme was condemned earlier this month by Economy Minister Giovanni Tria, who argued such a proposal would be either illegal or useless.
However, both the League and its government partner the 5-Star Movement, hit back at his claims and said Mr Tria’s ministry has done nothing to resolve the problem of unpaid state arrears.
Prime Minister Giuseppe Conte appeared to side with Mr Tria, telling Italian newspaper Il Fatto Quotidiano that mini-BOTS raised “several difficult issues”.
He did not go into detail but said he would meet Mr Salvini and Mr Di Maio to discuss how the coalition can move forward.
In a recent chat with Express.co.uk, three analysts picked Italy when asked which nation they believe would be the most likely to ditch the euro.
They claimed the ‘mini-BOT’ scheme could be seen as the pathway for Italy finding a way to form its own currency, while also drawing on the budget spat with the EU as reasons why Italy could leave the eurozone.