Italy’s debt worries EU

BRUSSELS — The European Commission could impose sanctions on Italy as a last resort if they cannot reach an agreement over Rome’s rule-breaking budget, but Brussels wants to avoid that option, the European Union’s (EU) economics commissioner said on Tuesday. Last month, the Commission rejected Italy’s budget, saying it was in blatant breach of EU fiscal rules and could further increase the country’s huge pile of public debt. “I was never in favor of sanctions. Sanctions are always a failure,” Pierre Moscovici told reporters on the sidelines of a meeting of EU finance ministers. But when asked about Italy, the euro zone’s third biggest economy, he added: “I want a dialogue, but sanctions can be finally applied if we cannot reach an agreement. On the 13th of November we expect a strong, precise answer from the Italian government.” Italy’s Finance Minister Giovanni Tria reiterated on Monday that the budget would not change and that a planned larger deficit for next year would not increase the public debt, which tops 130% of gross domestic product. If there is no change to the budget, EU officials have said the Commission is likely to react at its Nov. 21 meeting by issuing a critical report on Italy’s debt, the first step in a disciplinary procedure against the country. Commission Vice-President Valdis Dombrovskis said later on Tuesday that the EU executive was considering sanction proceedings against Italy for its high debt if it did not make “substantial” changes to the budget.