Don't look for big changes to Italy's 2019 budget, says anti-establishment minister
- Italy's anti-establishment government promised to increase public spending, raising the public deficit to 2.4 percent of GDP in 2019 — up from a previously agreed target of 0.8 percent.
- Italian new media suggested that the government could alter its growth forecasts to make them closer to the commission's.
The Italian government will not make any big changes to its 2019 budget plan, despite opposition from the European Commission, an Italian minister told CNBC.
Rome has until the end of the day to amend its 2019 spending plans, after the European Commission said last month that the budget draft disrespected previous commitments. The anti-establishment government promised to increase public spending, raising the public deficit to 2.4 percent of gross domestic product in 2019 — up from a previously agreed target of 0.8 percent.
"I don't expect the Italian government to make any substantial revisions," Lorenzo Fioramonti, a junior minister for the Five Star Movement and one of the architects of the party's economic policy, told CNBC's Willem Marx.
"I think there may be a dialogue around some potential second steps, but I think the bulk, the core of what's being proposed will stay the same," Fioramonti said, suggesting the ongoing exchanges between Brussels and Rome are more about what will happen next, rather than the actual content of the budget.
Italian news media suggested the government could alter its growth forecasts in order to bring them more in line with the commission's. However, it is difficult to see how that change alone could please Europe and prevent it from enforcing special monitoring and giving policy-making advice to Italy — a procedure that usually is applied to countries that have to bring their deficit and debt levels down.
Brussels and Rome hit an impasse over Italy's spending plans last month and have engaged in a battle of words since then. One the on hand, the European Commission wants to show that it applies its own rules — a common criticism against the EU's executive arm — and, on the other hand, the anti-establishment government in Rome wants to please its voters and challenge European rules.
"We are sending a message that Europe needs to re-think the way in which it conceived economic development over the past few decades," Fioramonti told CNBC.
"It is important that Europe comes to the realization," he said, "that having a founding member in such a level of distress requires a collective effort to change."
Italy was among the group of six countries that first established what's known now as the European Union.