Jean-Claude Juncker, head of the European Union’s executive arm, tapped Conte’s shoulder in a friendly enough gesture as he welcomed the premier at the commission’s Berlaymont headquarters. “Good evening,” Conte greeted reporters. “We won’t quarrel, we are friends,” Conte added while Juncker stayed tight-lipped.
Behind the bonhomie is a standoff over Italy’s 2019 spending spree that’s whipsawed financial markets and prompted the commission to take the first step toward possible fines. Concerns are focused on the impact of a 2.4% budget deficit target for next year on Italy’s debt mountain, the biggest in the euro area in real terms.
Salvini threatens Italy government collapse if deficit changed
Backing Conte at the dinner was Finance Minister Giovanni Tria, while Juncker was flanked by commissioners Valdis Dombrovskis and Pierre Moscovici.
Absent, however, were the populist leaders — deputy premiers Matteo Salvini of the anti-migration League and Luigi Di Maio of the anti-establishment Five Star Movement — who have vowed they won’t back down on core parts of the budget which include expensive promises on welfare benefits, pension reform and tax cuts, while saying they were willing for a dialogue with the commission.
Bring down government
Enjoying a steady climb in public opinion polls, Salvini told Conte in a telephone call that he would bring down the government if the deficit target was changed, newspaper La Repubblica reported earlier Saturday. Similarly, Di Maio has ruled out shrinking the number of people who would benefit from a “citizen’s income” for the poor and a lower retirement age.
As the dinner began, Salvini posted a tweet with a tough message for Brussels: “I demand RESPECT for the 60 million Italians who, with 5 billion given as a gift every year to Europe, don’t want INSULTS, they want the possibility to study, work, retire. They sent me into government and I answer to them, and I don’t retreat.”
The commission said earlier this week that Italy wasn’t respecting EU rules on borrowing, that may lead to a so-called excessive deficit procedure. That could involve possible fines of 0.2% of Italy’s gross domestic product, which could increase to 0.5% if Rome doesn’t amend its budget.
While the EU has started such procedures for other countries in the past, it has never done so on the basis of excessive debt. It has also never actually fined any country. EU governments would get several opportunities to weigh in and Italy could be given as much as six months more to comply once the process starts.
Welfare benefits
Conte warned before flying to Brussels Saturday that the government would stick to the main reforms in the budget.
Asked at the Rome Med foreign affairs conference whether his administration will dilute welfare benefits and pension measures, Conte told reporters: “We have spoken of adjustments, but no one has ever considered renouncing the defining reforms of this government.”
Salvini’s League party rose to 36.2% in voter intentions in November, the fourth straight poll showing an increase, according to an Ipsos survey in newspaper Corriere della Sera. Five Star, which emerged as the biggest single party in March’s general election, slipped to 27.7% this month, from 28.7% in October.