MILAN (Reuters) – The European Commission will launch disciplinary procedures against Italy on Wednesday with a letter stating that Rome’s fiscal policies lack prudence and could expose the nation to a shock loss of market confidence, newspaper La Repubblica said.
The newspaper quoted from what it said was a draft of a letter to be sent to the Italian government, which has embarked on major new welfare initiatives in an effort to boost the euro zone’s third-largest economy.
The daily also said the commission would ask Rome to make budget cuts of around 3-4 billion euros (2.6-3.5 billion pounds) to avoid EU sanctions, though it did not source this to the letter.
“The absence of prudent budget policies exposes the country to a shock loss of confidence on markets, with a negative impact on the real economy and growth,” the letter was quoted as saying by La Repubblica.
Italy narrowly averted such disciplinary action late last year, when it reached an agreement with the commission over its 2019 budget. The commission had initially rejected the budget, saying it would not cut Italy’s large debt.