Italy challenges Brussels and keeps its budget

The Italian cabinet maintains its intention to spend a lot more next year than was agreed with the European Union. After a letter from Brussels and a disagreement between the coalition parties, an additional council of ministers was set up on Saturday afternoon. At a press conference that followed, the cabinet's political leaders, Deputy Prime Ministers Matteo Salvini (Lega) and Luigi Di Maio (Five-Star Movement) made it clear that they would not come back for them to bring the deficit to 2.4%.

As a result, the populist coalition ignores Brussels criticism that the budget for the coming year is "a significant gap" from previous agreements. Previous Italian cabinets had agreed with the EU that the budget deficit would have disappeared within two years. But in order to realize their plans to end pension reform and introduce some sort of assistance, the Lega and Five Star movements want the deficit to rise to 2.4%.

They must officially communicate it to Brussels Monday afternoon before noon. Then the European Commission must decide if it wants to take action against Italy.

Moody's reduced solvency Italy

"We do not expect to leave the EU or the single currency, we feel good in the EU, but only want to change the rules ", said Mr. Salvini after the Council of Ministers. Similarly, Di Maio said that Rome "wants to sit around the table with EU institutions to change Europe". Both believe that Brussels attaches too much importance to spending cuts and that this limits growth opportunities.

The rating company Moody's declassified Italy on Friday night. As an argument, Moody's pointed to the "lack of a coherent reform agenda to develop". Italy's public debt has now been upgraded to Baa3, the second-lowest level. The lowest comes down to "nothing is better".

Figures released Friday by the Italian central bank show that foreign investors sold for 67 billion euros of Italian government documents between May and August. This represents about one-tenth of the national debt in foreign hands. About one-third of the 2,300 billion euro debt is in foreign hands.

Italian political leaders suggested that Moody's approach had been taken into account. Salvini had said Friday that Italy "has many opponents abroad who are interested in Italy in distress, kneeling". Di Maio said Saturday afternoon that he had received the news "with a smile".

Cabinet meeting to quell internal quarrel

Within the coalition, there was a serious debate about the budget, but not about the relationship with Brussels. Luigi Di Maio said that "a hand" had changed the text to give a much broader tax amnesty plan than had been agreed. The Lega has protested against a plan to no longer change automobile insurance rates by region (which would force northerners to pay more because of the greater number of damage suffered in the south), which is not the case. has not been accepted.

In addition, Prime Minister Conte found that he found it humiliating to have to consult the real heads of cabinet, Salvini and Di Maio, at the summit on Wednesday evening and Thursday in Brussels. Macron also insulted him and found little support from other heads of government for his "handsome" budget. According to Italian journalists in Brussels, Conte threatened to resign Wednesday night.

These disputes were resolved with respect to the extra-ministerial meeting. Conte, Di Maio and Salvini were photographed together, as if to emphasize that they would like to meet the harsh criticism expected of Brussels next week as well as the troubles and doubts on the financial markets.