While the government led by Giuseppe Conte had until the end of Tuesday 13 November to present a revised draft budget for 2019 in line with the rules of the preventive arm of the Stability and Growth Pact, Rome did not seem, at the time we went to press, to want to reverse its budgetary orientation.
As a reminder, the European Commission has asked the Italian authorities to present a revised draft budget plan for 2019 on 23 October last (see EUROPE 12123), after they had submitted a document incompatible with the rules of the preventive arm of the Stability and Growth Pact (see EUROPE 12117). While under these rules, Rome is required to reduce its structural deficit by 0.6% of GDP in 2019, the Italian government expected it to increase by 0.8% of GDP and the Commission even estimated that this deterioration would reach 1.2% of GDP (see EUROPE 12133).
But the latest statements by the Italian executive did not suggest any particular turnaround (see EUROPE 12135). A meeting of the Council of Ministers is scheduled to take place starting at 8 p.m. in Rome, but it seems unlikely that the approach will be radically different from the one envisaged.
The Commission could then recommend to the EU Council to reopen a procedure for examining the debt criterion when it delivers its final opinion on 21 November. This sequence could eventually lead to the opening of an excessive deficit procedure.
While the Italian press had considered an adjustment of the growth level in this revised draft budget, Giovanni Tria, the Minister of Finance, did not suggest such an adjustment. "The growth rate is not negotiable, it is the result of an extremely technical evaluation", he said on Tuesday.
On the European side, Rome is being urged to present a revised draft budget in line with budgetary rules, as indicated by the Eurogroup on 5 November last (see EUROPE 12130).
"Those who think they can solve all the problems on their own by creating new debts are jeopardising the stability of the euro, because our common currency can only work if each of its members assumes its responsibilities for sustainable finances", German Chancellor Angela Merkel told the European Parliament on Tuesday (see other news). (Original version in French by Lucas Tripoteau)