MILAN — Italy’s leader on Monday gave no indication that his government would rein in public spending plans, keeping alive a dispute with the European Union, which wants the country to revise its budget.
Giuseppe Conte defended the deficit-busting budget in a news conference in Rome following the noon deadline for Italy to submit it response to the EU’s rebuke of the draft budget.
The plan increases the deficit to 2.4 percent of GDP next year, three times more than initially targeted. The EU complains that the plan means Italy will not lower its public debt as promised. At over 130 percent of GDP, debt is more than twice the EU limit.
Asked what he would do if the commission rejected the budget, Conte replied “we will sit at a table to discuss it.”
Conte quibbled over details such as calculation methods. He said his government’s spending plan increased the deficit by just 0.4 percent, adding 17 billion euros in spending, not the 1.5 percent as calculated by the European executive Commission. He said his government inherited a higher deficit than initially forecast, and that the base deficit was further increased by a postponed increase in value-added taxes.
While he wasn’t explicit, Conte’s comments made clear that the government did not make adjustments in its budget, as EU officials had hoped, but instead went to lengths to explain it.
Conte repeated that the budget was “well-conceived,” and that it would promote economic growth.
He noted that the 2.4 percent deficit level was a ceiling and held out the possibility that it would not reach that level in 2019. He also repeated that it would be brought lower in the following two years.
Investors and financial experts are skeptical. Even before knowing whether Italy would back down from its proposed deficit increase, credit ratings agency Moody’s downgraded Italy by one notch to just one level above junk status.
Italy’s plans have widely been criticized by many EU leaders and the EU Commission chief as being out of line with the bloc’s spending constraints.
The EU Commission handed Italy a stinging letter last week warning that the significantly higher deficit targets represented a deviation “unprecedented in the history” of EU budget rules.
Margaritis Schinas, the European Commission spokesman, said Monday that Italy’s response “has just arrived” and added that on Tuesday “the Commission will discuss the procedure and will determine” its next steps.