Hours after Deputy PM Matteo Salvini was handed an even clearer mandate by the Italian people to oppose austerity, promising the next budget will focus on tax cuts, EU officials have reportedly threatened a huge fine over its failure to rein in debt.
Bloomberg reports that the 3.5 billion euro ($4 billion) fine could come as part of the European Union’s regular budget monitoring process on June 5 and would mark an escalation of Rome’s budget tussle with Brussels that roiled markets at the end of 2018.
Italian bond markets spiked 6bps on the headlines…
As a reminder, under EU fiscal rules, the bloc’s members need to keep their deficit below 3% of GDP and debt under 60% of GDP. Countries with debt that exceeds that level need to be reducing it at a satisfactory pace. At 132% of output, Italy’s debt is more than twice the EU limit, and, according to the bloc’s executive arm, not falling fast enough.
However, this seems more like a well-timed leak/threat after Salvini’s comments as the final decision on further fines may not come for months, after Italy is given time to correct its finances.
The EU has never fined a country over its budget so far.
via ZeroHedge News http://bit.ly/2Xgotnn Tyler Durden