  EU-Italy budget row

The EU Commission and Italy have settled their row over the budget plans put forward by the government in Rome. Italy now intends to limit new debt to 2.04 percent of GDP. Some commentators praise Brussels' decision not to go ahead with an excessive deficit procedure. Others criticise that by giving in the EU has undermined the credibility of the Stability Pact.

The Italian government has presented its draft budget to the European Commission without modifications. The latter had rejected it three weeks ago and for the first time ever demanded that a member state submit a revised version. In particular the planned increase in public debt to 2.4 percent of the GDP means that the country now faces an excessive deficit procedure. Will the row between Rome and Brussels escalate?

The battle lines are drawn in the row over Italy's budget for 2019: after the EU Commission rejected the draft budget of a member state for the first time in its history, the government in Rome has been given three weeks to revise it. But not all commentators criticise Italy's course. Some see it as humane economic policy.

There is still no sign of an agreement in the budget row between Italy and the EU. Even before Brussels could examine Rome's explanation for the high level of new debt, the Italian government announced that it had no intention of amending its draft budget. One side has all the trump cards in this power game, commentators observe.

Italy's coalition government wants to raise the public debt to 2.4 percent of the GDP in 2019 to finance the expansion of the welfare state. The money would be used to fund basic security benefits for the poor and an early retirement scheme. It said the deficit for 2020 and 2021 would be reduced. Rome is challenging the EU, which only stands to lose in this dispute over Italy's debt policy, commentators conclude.

Italy's new government is due to present its budget plan to the European Commission today, Thursday. In his draft budget independent finance minister Giovanni Tria aims for a deficit that doesn't exceed 1.8 percent of the country's GDP. The ruling parties, however, want the deficit target to be raised to 2.4 percent in order to push through their election promises. Italy's press is sceptical.