Italy government looking to avoid EU sanctions on budget

Reuters
FILE PHOTO: Italian Deputy PM Luigi Di Maio speaks at the 5-Star Movement party's open-air rally at Circo Massimo in Rome, Italy, October 21, 2018. REUTERS/Max Rossi/File Photo

ROME (Reuters) - Italy's government is looking to avoid European sanctions over its 2019 budget, Deputy Prime Minister Luigi Di Maio said on Thursday while stressing he did not want Italians to have to foot the bill.

"When they ask us to respect all the rules, they are asking us for a blood and tears budget," Di Maio said.

On Wednesday, Italy re-submitted its draft 2019 budget to the EU Commission with the same growth and deficit assumptions as a draft previously rejected for breaching EU rules, stepping up its showdown with Brussels.

The EU sent back Italy's previous draft last month because its growth assumptions were too high, the deficit too large and debt not low enough.

It now has the option of starting disciplinary steps against Rome, which could eventually end in fines for Italy, although this option has never been used so far.

"We are working to avoid any (disciplinary) procedure," Di Maio said.

His words were echoed by Prime Minister Giuseppe Conte who said on Thursday he would be sitting down with the Commission "not to ask how to modulate the procedure but to invite them to consider not launching it all."

Earlier on Thursday two Italian dailies reported Conte was trying to convince Brussels any sanctions imposed on Rome over the budget should be for breaching EU fiscal rules on excessive deficit rather than debt.

Separately, Economy Minister Tria said that Italy intended to continue its dialogue with the Commission as well as "work effectively to make measures designed to support our strategy effective".

Tria admitted that Italy's budget offered "a different answer from (those) of the past, but not less solid or less credible."

He then criticised Europe for appearing to be unable to coordinate policies to tackle the general economic slowdown in the area.

Economic growth in the eurozone slowed down in the third quarter of the year as the German economy contracted.

That has raised concern the area's five-year expansion may be coming to an end just as the European Central Bank prepares to dial back stimulus measures.

(Reporting by Angelo Amante in Rome, Riccardo Bastianello in Padua, writing by Stephen Jewkes and Giulia Segreti; Editing by Crispian Balmer and Matthew Mpoke Bigg)