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EU Commission tells Rome Italian debt is worry for whole euro zone

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EU Commission tells Rome Italian debt is worry for whole euro zone
The Italian Parliament is pictured in downtown Rome, Italy, October 19, 2018. REUTERS/Alessandro Bianchi   -   Copyright  ALESSANDRO BIANCHI(Reuters)
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ROME (Reuters) – The European Commission has said Italy’s large public debt is a source of “concern for the euro area as a whole” and has asked the government to address worries about its big-spending 2019 budget by Nov. 13.

“Italy’s public debt remains a key vulnerability,” the Commission wrote in a letter dated Oct. 29, which was released by the Italian Treasury on Tuesday. The Treasury said it would respond by the middle of next month, as requested.

Italy is locked in a tussle with the EU executive, which earlier this month rejected the government’s expansionary budget and asked Rome to submit a new one within three weeks.

The ruling coalition has so far ruled this out.

The budget targets a deficit next year of 2.4 percent of gross domestic product, up from a targeted 1.8 percent this year, flouting an EU requirement that the deficit should fall steadily towards a balanced budget.

The government has forecast that Italy’s debt/GDP ratio will fall next year to 130.0 percent from a projected 130.9 percent this year, but the Commission said this was not enough.

“Such high public debt constrains the government’s room for manoeuvre (to allow) more productive investment for the benefit of its citizens,” it added.

(Reporting by Crispian Balmer; Editing by Gavin Jones)

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