Italy: Excessive Deficit Procedure

Published on June 5, 2019

Early this morning, the European Commission announced that Italy is violating EU rules on debt reduction and that starting disciplinary steps would be warranted.

** This report will go for endorsement to the deputy euro zone finance ministers next week, and the Commission will then prepare a formal proposal to open the excessive deficit procedure, together with a plan on what Italy should do to bring it down, and in what time frame.

** Because the real issue flagged is about public debt, rather than the budgetary deficit, the time frame for any EU action plan for Italy is likely to be also long-term, covering as long as possibly six years.

** This Commission proposal, from what we understand, will be almost certain to be adopted by EU finance ministers at their meeting on July 8-9, and from then on Italy will be under the EU procedure.

Nevertheless, our indications continue to be, once again, not to expect any financial sanctions on Italy anytime soon.

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