Italian cabinet approved the 2019 budget that would boost budget deficit from the current 1.8% of GDP to 2.4% next year. The key measures include basic income for the poor and tax cuts for the self-employed. Retirement age was also lowered and there is partial amnesty offered to settle tax disputes. Prime Minister Giuseppe Conte hailed after the cabinet meeting that “this budget keeps the government’s promises while keeping public accounts in order.” Economy Minister Giovanni Tria also talked down the potential clash with the EU and said “the idea that this budget can blow up Europe is totally unfounded.”
But no matter what Italy says, the drama with EU will now formally begin. After formally receiving the budget, European Commission will have a week, by October 22, to identify “particularly serious non-compliance with the budgetary policy obligations” of a state. By October 29, the Commission will have to decide whether to reject the draft budget as non-compliant, with written explanations. The showdown will come on November 5 in the Eurogroup of finance ministers meeting. And Italy is expected to submit a revised budget on November 19.
