Italy leaving euro would be ‘suicide’ but other fallout looms – Juncker

Compiled from Dispatches

There is no danger that Italy will abandon the euro as that would be suicidal but Rome’s disregard for European Union budget rules “will have consequences”, European Commission President Jean-claude Juncker said in remarks broadcast on Friday.

Rome and Brussels have been engaged in a blistering battle of words since European Commission’s Economic and Financial Affairs Commissioner Pierre Moscovici rejected Italy’s draft budget for 2019 that includes a budget deficit of 2.4 percent of GDP.

Italy has insisted it needs to increase its deficit to 2.4 percent, which breaks EU fiscal rules that are designed to protect the eurozone. Italy’s projected GDP for 2019 is expected to be £1.67trillion (€1.87trillion), according to Trading Economics.

The European Commission said the deficit is too high, and has called on Rome to change its fiscal plans.

Earlier this week, the European Union threatened to sanction Rome with a hefty fine unless the budget changes are made but Italian economists have belittled the warning as a “little thing” compared to the economic boost Italy is expected to benefit thanks to the new economic policy.

“I do not see that danger because no one commits suicide,” Juncker told Austrian broadcaster ORF when asked if Italy would abandon the euro, but he did expect fallout from the budget dispute.

“For the first time someone is saying the (EU budget) rules are of no interest to us. That will have consequences,” he said.

Asked what those consequences were, he said Rome has to answer the commission’s questions by mid-november “and then we will see”.

“Many Italians want to remain a member of the European Union, a growing number of Italians also clearly support the euro because Italians ... notice, feel, know, sense that the euro protects them, too. And in terms of arguments we will move in that direction,” he said.

Call for march

Italy’s Interior Minister Matteo Salvini hit back at the European Union for “threatening” the country to change its budget proposal, urging Italians to take to the streets to signal Rome “will kneel no longer.”

The Italian deputy prime minister dismissed calls from the EU for “clarifications” on Italy’s new budget proposal.

Salvini lashed out at Brussels, calling on Italians to march down the streets on December 8 to signal their unity and support for their ministers’ economic policy.

Addressing citizens with a live video on his Facebook page, he said: “Mothers, fathers and children telling those Brussels misters ‘let us work, let us live’.

“We have a right to work, a right to health, a right to education, a right to a pension. In Brussels they have nothing else to do but send us disapproving letters, threatening letters, telling us to change our budget plan, not to change our pension law. Telling us not to reduce taxation but to actually add more.”

Salvini once again reiterated the government will not give in to pressure from Brussels to change its budget proposal despite Moscovici rejecting it and giving the Lega and its coalition partners in the Five Star Movement three weeks to make changes.

Reuters, express.co.uk contributed to the story.