Brussels warns of new row brewing over Italy finances

The EU warned Sunday of a new row brewing with Italy over its budget, barely a few months after both sides agreed on a hard-fought deal with Rome's disputed 2019 finances.

Brussels warns of new row brewing over Italy finances
Italy’s Prime Minister Giuseppe Conte at the EU parliament in February. Photo: AFP

“I'm really worried. In no other EU member state has the economy cooled so dramatically. Already in our winter forecast, we had expected Italy to post growth of only 0.2 percent (in 2019),” said European Commission Vice President Vladis Dombrovskis.

“It shows clearly that the direction taken by the government in Rome is damaging for the economy. The interest rates have risen, instability also,” he told Welt am Sonntag newspaper, noting that investor confidence has failed to improve in the country.

The commission will take stock of the situation in June and discuss next steps.

Italy's public debt is a big problem and now sits at 2.3 trillion euros, or 131 percent of Italy's GDP — way above the 60 percent EU ceiling.

After a bitter row, Italy's populist coalition government committed to not adding to its colossal debt load this year.

But Rome's projection for its 2019 budget was based on growth of 1.0 percent of GDP, which international organisations now view as too optimistic.

The International Monetary Fund sees growth reaching only 0.6 percent, while the European Commission's forecast is far more pessimistic, at just 0.2 percent.

“Rome's growth forecasts are too optimistic,” warned Dombrovskis.

“It doesn't make things easier that the spending programme decided by the government for 2019 will be pushed back and hit the budget in the coming year.

“We see the situation as problematic and expect difficult discussions” with Rome, he added.

The Italian economy contracted in the fourth quarter of 2018 because of a slowdown in exports, plunging the eurozone's third-largest economy into recession and increasing the government's budgetary problems.

Despite the difficulties, he believes it is still possible to find an accord with Rome.

“We have also had difficult discussions with the previous governments but at the end, they managed to find solutions to limit their debt.

READ ALSO: Italy's budget battle with Brussels: What you need to know

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Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.