The European Commission rejected Italy’s draft 2019 budget on Tuesday because the plan breaks EU rules in an “unprecedented” way and asked Rome to submit a new one within three weeks or it would face disciplinary action.
The decision by the European Union executive arm is the first time it exercises the power, obtained during the sovereign debt crisis in 2013, to send back a budget of a euro zone country that violates the rules.
“Today, for the first time, the Commission is obliged to request a euro area country to revise its draft budget plan,” Commission Vice President for the Euro Valdis Dombrovskis told a news conference.
The Commission said that the revised budget it expected to receive from Italy should be in line with the recommendation of EU finance ministers from July 13.
In July, EU ministers asked Rome to cut its structural deficit, which excludes one-offs and business cycle swings, by 0.6 percent of GDP. The plan rejected by the Commission increases that deficit by 0.8 percent of GDP.
Italy sent a letter to the Commission on Monday,acknowledging that its draft budget was in violation of EU rules, but insisting it would still go ahead with it.
“The Italian Government is openly and consciously going against the commitments it made,” Dombrovskis said.
Dombrovskis noted, that unless Rome changes its draft budget in the next 3 weeks, the Commission was ready to open a disciplinary process against the country, called the excessive deficit procedure, based on the lack of progress in cutting debt — an obligation under EU law.