As reported by Reuters over the weekend, citing unnamed sources, the Italian government expects the European Union's leadership to reject a country's domestic government budget for the first time since Europe increased the amount of oversight Brussels gets over countries' government budget.
"The Commission has slammed as an unprecedented breach of EU fiscal rules Italy’s 2019 budget plan, which aims to lift the deficit to 2.4 percent of domestic output next year from 1.8 percent in 2018."
"Since receiving beefed-up powers in 2013 over member states’ budgetary plans, the Commission has never asked a country to submit a revised budget."
"Italy’s 2.3 trillion euro ($2.65 trillion) public debt, one of the world’s largest, makes the country vulnerable and a potential source of contagion for other euro zone countries."
Investors have shed 67 billion euros in Italian bonds since a populist government formed in May, sending the risk premium Italy pays over safer German paper to a 5-1/2 year high of 3.4 percentage points."
The source said Economy Minister Giovanni Tria and Prime Minister Giuseppe Conte had unsuccessfully pushed for a reduction of the 2019 deficit target at a cabinet meeting on Saturday."
The source did not rule out an agreement to lower the deficit goal could be found during a three-week period of negotiations with Brussels that will follow the rejection."
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