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Pierre Moscovici: Brussels better off not fighting Italy over budget

by host

It’s not in Brussels’ interest to pick a fight with Italy over its “explosive” debt and its budget targets but that doesn’t mean Rome shouldn’t respect EU fiscal rules, European Commissioner for Economic and Financial Affairs Pierre Moscovici said Friday.

“We have no interest in a crisis between the Commission and Italy, nobody has an interest because Italy is an important eurozone country,” the commissioner told France’s BFM TV.

“But we don’t have any interest either that Italy does not respect the rules and does not reduce its debt, which remains explosive,” he said.

“When you’re in debt, you’re cornered and you can’t act,” the French commissioner added. “Staging a recovery with very high debt eventually turns against you.”

Italy’s debt has been under pressure Friday, with the yield on its 10-year bonds rising above 3 percent. That came after the country’s anti-establishment 5Star Movement and the far-right League on Thursday forced Giovanni Tria, a technocrat, to agree on a 2019 deficit at 2.4 percent of GDP, far higher than the 1.6 percent that the economy minister had wanted.

Financial markets have been nervous since the government took office in June over fears that its spending plans will increase Italy’s debt, which stands at around 131 percent of national output and is the highest in the eurozone after Greece.

Italy’s 2019 budget law must be presented to Brussels by October 15 and to the parliament in Rome by October 20 before being approved by year-end.

The European Commission said Friday it will assess Italy’s draft budget plans — and those for all eurozone members — before the end of November, Reuters reported.