Italy Studying Lower Deficit Goal After EU Talks: Budget Update
- Italy Studying Lower Deficit Goal After EU Talks: Budget Update
by John Follain and Lorenzo Totaro, https://www.bloomberg.com/
Italian officials are studying scenarios for a lower 2019 budget deficit target after weeks of pressure from the European Union. Italian assets jumped.
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* Five Star, the League both signal compromise on deficit target
* Prime Minister Conte to meet senior ministers at 7:30 p.m. in Rome
* Italian bonds jump
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For EU officials, a reduction of the deficit target to around 2.2 percent would likely not sway the Commission’s assessment that the budget breaches EU rules – especially as the bloc estimates that the deficit for next year would in fact be much higher.
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What is key to officials in Brussels is whether any tweaks affect the structural balance, a key measure in assessing countries’ budgets.
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“If Italy ends up in a financial crisis that could be a big thing, a big problem for the euro zone and the whole of Europe,” said Clemens Fuest, German economist and president of the country’s Ifo Institute. Compared to Brexit, “Italy is the bigger problem, particularly in in the medium term. Brexit is more of a short-term issue.”
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