EU to demand 'clarifications' from Italy over budget: source

Brussels (AFP) –


The European Commission will deliver a letter to the Italian government on Wednesday, asking for "clarifications" on a 2019 budget that violates EU spending rules, an EU source said.

The request by the executive arm of the European Union will likely infuriate Rome and relaunch a long process that could see Italy's coalition government hit with unprecedented sanctions for running a huge debt and breaking spending promises to the EU.

Italy's far right Deputy Prime Minister Matteo Salvini on Tuesday said that he expected Brussels to sanction his country for its deteriorating deficit and huge debt by imposing a fine of three billion euros ($3.3 billion).

"At a time when youth unemployment is reaching 50 percent in some regions (...), someone in Brussels is asking us, under past rules, for a fine of three billion euros," he told RTL radio.

"All my energy will be used to change these old rules," said Salvini, whose far-right party, the League, won European elections on Sunday.

"We will see if this little letter from Brussels in which they sanction us for the debt accumulated in the past will arrive," he also joked.

Next week the commission is expected to recommend the opening of something called an excessive deficit procedure against Italy, due to its colossal public debt that stood at 132.2 percent of GDP in 2018, well above the 60 percent threshold set by European rules.

The opening of such a procedure, which needs to be validated by EU finance ministers, could result in financial sanctions of up to 0.2 percent of Italian GDP, which corresponds to the three billion euros mentioned by Salvini.

According to a European source, Brussels will send the letter to Rome on Wednesday -- asking it for "clarifications on the evolution of its debt and structural deficit".

The populist-far right coalition in Italy, which brings together the League and the Five Star Movement, had already been in conflict with Brussels at the end of last year over Rome's big-spending 2019 budget, which the commission rejected in a historic first.

Both sides finally softened their positions to reach a compromise, but in the commission's latest economic forecasts, published in early May, Italy was the worst economic performer in the eurozone, with zero growth well below other countries and debt at a record level.