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Italy euro crisis: Leaders defiant against EU budget rules depsite plummeting exports

Defiant Giovanni Tria said the Italian government will not be providing evidence to the EU to show Rome is sticking to fiscal rules, but said they will “anticipate our plans for this and next year”. Italy has been threatened with a €3billion fine from the Commission if it cannot show how it plans to maintain monetary goals and strategies agreed last December. The two sides have been disagreeing for months over Italian spending plans, with Brussels urging Rome to make its debt more sustainable by cutting its structural deficit. Italy now has the second largest debt in the entire eurozone, only behind Greece, at 132 percent.

The Commission forecast this figure will rise further to 135 percent next year.

Remaining optimistic about the economy as finance ministers meet in Luxembourg, Mr Tria said: “We will not give new documents to the EU, we will prove deficit is decreasing.

“We will anticipate our plans for this and next year.”

But he added: “The only problem is that since we are halfway through the year there will be no new documents to be released.

“We have to show what we are already doing.”

Italian structural deficit, which should have decreased by 0.6 percentage points this year under EU fiscal rules, is instead projected to worsen by 0.2 percentage points.

When asked by journalists what action Brussels is looking to see, Mr Tria answered: “We will have to give numbers and where they come from.”

In another sign of weakness for the Italian economy, April saw the turnover of the industry second recorded its first decline since the beginning of the year, according to ISTAT data.

The industry sector saw a decrease of 1.0 percent, while orders were down both on a monthly basis by 2.4 percent, and on an annual basis at 0.2 percent.

Exports fell by 2.9 percent compared to the month before, and 2.8 percent on 2018.

European Commission Vice President Valdis Dombrovskis urged Italy to take significant steps to put its public finances on track.

Speaking today, he said: “Considerable adjustments are needed.

“I’ll discuss additional elements with [Giovanni] Tria.”

His sentiment was shared by President of the Eurogroup Mario Centeno, who added: “Italy must clarify how it will reach the goals it committed to regarding the budget.”

Earlier today, Germany’s finance minister warned Italy not to flout EU fiscal rules as he claimed the regulations are not “just something that’s written on paper”.

Speaking to CNBC as eurozone finance ministers arrived in Luxembourg, Mr Scholz said: “In the end the rules are not just something that are written on paper, they have reasons.”

European Economics Commissioner Pierre Moscovici said yesterday the Commission needed evidence to show Italy was complying with fiscal rules in 2019 and 2020.

Mr Moscovici said: “We are ready to move on with an excessive deficit procedure for debt. We are on track.

“Today there is another step. But it is still avoidable and everybody wants to avoid it.”

Speaking last week, the Italian government’s coalition leaders – made up of the anti-establishment Five Star Movement and right-wing League – agreed overnight on a willingness to address the EU’s concerns.

Prime Minister Giuseppe Conte said after they met that they would work together to avert disciplinary action and a potential fine.

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