European Union Formally Rejects Italy's Budget
The European Union has formally rejected Italy's budget. The Italian government has asked the European Union to accept an Italian budget plan that has a 2.4% deficit over GDP ratio. The European Union has set a maximum desired budget deficit of 1% of GDP.
Italian Economic Minister Giovanni Tria and Prime Minister Giuseppe Conte have been unsuccessful in negotiations with their Italian Cabinet. The people of Italy have been clamoring for more spending. The Italian press highlights the United States deficit over GDP ratio of being between 4% and 5% for fiscal 2019. In addition the surging economy of the United States is in direct contrast to the sluggish Italian economy. The Italian Cabinet is much more beholden to their people then either Economic Minister Giovanni Tria and Prime Minister Giuseppe Conte, as reelection is sooner for many of the Cabinet members.
The recent tumult between Italy and the European Union has caused a massive spike in Italian debt yields, making it much harder for Italy to borrow. Furthermore, non-compliance by Italy will result in a very large fine being applied to Italy by the European Union, further worsening fears about a potential EU split.
There are theories that China might consider bailing out Italy as a way to grab a significant foothold in Europe. This has been floated by Italian press based on the trip Italian Economic Minister Giovanni Tria and Prime Minister Giuseppe Conte took to China in August and the subsequent announcement that Italy wanted to be China's first G7 partner on their new "Belt and Road" initiative. See the video below for more details on China's global plans
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Written by Alexander Fleiss & Edited by Rachel Weissman