Italy submits controversial budget to European Commission for review
Italy will submit its draft budget for the next three years to the European Commission today—which will then review the plan to check if it follows EU policy.
The Southern European country has experienced a tumultuous year—both economically and politically. Italy’s debt, now 130% of GDP and the second largest in the Eurozone, represents a significant risk for both the rest of the continent and the world. Indeed, as many economists believe a global financial crisis is overdue, some have predicted Italy to be the origin point.
However, the final budget remains to be seen, as a heated debate rages within Italy’s ruling coalition over its contents. While the country’s deficit is estimated to already be around 2% of GDP, party promises of a guaranteed income and a flat tax threaten to push it over the 3% EU cap.
Such a scenario could see the budget proposal sent back to Rome for revision, however, doing so would only give Italy’s populist government a scapegoat for its economy’s problems. Instead, expect the Commission to give Rome some breathing room over the 3% cap, barring its proposal poses a significant threat to the European economy.
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