Economic Commissioner Pierre Moscovici said Rome must realise it cannot break the EU’s fiscal rules, which it is in breach of with its bumper spending plan.
By – Laura Mowat
The EU is concerned the budget proposals would increase Italy’s public debt burden due to the planned boost in spending.
Brussels demanded Rome comes up with a revised budget, but Italy has continued to insist it must increase its deficit to 2.4 percent, which breaks EU fiscal rules designed to protect the Eurozone.
The Commissioner said: “I want a dialogue, but sanctions can be finally applied if we cannot reach an agreement.
“On the 13th of November we expect a strong, precise answer from the Italian government.”
Mr Moscovici said the next step for Italy depends on the country’s budget response.
He has said: “The ball is now in Italy’s court.
“Member states must fully respect national democratic choices, but they should not run counter to our rules.”
However, Matteo Salvini’s eurosceptic Government coalition have refused to go back on their word and change the proposed budget.
The Commission has traditionally waited for final data on public finances before taking disciplinary action on eurozone states.
Sanctions could include a fine of up to 0.2 percent of its GDP, the suspension of billions of euros in EU funds and closer fiscal monitoring by the European Commission and the European Central Bank.
The EU could go in even harder with a fine of up to 0.5 percent of its GDP as well as taking control of Italy’s plans to issue new debt and a reduction of multi-billion-euro loans from the European Investment Bank.
Italy’s Finance Minister Giovanni Tria said Rome and the European Commission would continue to discuss the Italian budget.
He said: “We have some disagreements, but this does not mean we cannot have a dialogue, a constructive dialogue between the Commission and Italy.”
Read more: From 2018/11/02