Is Italy's Budget Situation Back On The Agenda Again?

[Djamel Brahimi]

[Jon Steeler]

The European Union was met with some hostile remarks from Italy over their warning that the countries budget deficit was set to worsen further next year. 

This has set the tone for a replay of the falling out between Italy and the EU that affected markets last year, where there was an argument after the populist government looked to deliver on its election promises. In reaction to the EU’s warning deputy prime minister was quoted as saying regarding the EU forecasts that “they never got one right”.

The suggestion has been for Italy to raise VAT and taxes in order to reduce the deficit but that seems to be out of the question for the deputy PM who was also reported as saying that taxes should be cut even if it means it breaches the EU’s limit of 3%budget deficit.

With government ministers in Italy claiming that the EU wants to damage the Italian government as they are hostile to Brussels and works in the interests of Italians, and the numbers cited buy the EU being called bogus it seems that this situation has reared its head once more and i wouldn’t be surprised to see it start to affect the markets and more importantly the Euro in the coming months once more.