The conflict between the European Commission and Italy on the budget plan presented by the latter government reached its peak on Wednesday. The European Commission sent back the budget proposal and asked the Italian government to revise the same.
It is the first time that the European Commission has had to carry out this step for a member nation of the European Union since it received rights to vet the member countries' budget plans in 2013. Earlier, the Commission had sent out a directive to the Italian government asking to cite its justifications behind its budget plans which the Italian government had done so, on Monday, 22nd of October.
However, Valdis Dombrovskis, the Commission's vice-president stated that the Italian response wasn't satisfactory enough to merit the plans being passed and vetted by it. The Italian economy is the third-biggest economy in the European Union but its debts are just as significant, at about 130% of its Gross Domestic Product, which is second to Greece.
The biggest cause of the differences of opinion between the European Commission and Italy is the cap of budget deficit set by the Italian government which the Commission believed would hike the country's expenditure against an already high debt.
The current ruling coalition that won the elections held in March 2018, meanwhile, is keen to present a pro-public budget in order to fulfil its election manifesto. Unsurprisingly, the Italian co-deputy prime minister Luigi di Maio stated, as quoted by the BBC, "This is the first Italian budget that the EU doesn't like.
No surprise: This is the first Italian budget written in Rome and not in Brussels!" His words were concurred and supported by his co-deputy PM of the country Matteo Salvini who also added, "This doesn't change anything.
They're not attacking a government but a people. These are things that will anger Italians even more." The repercussions of this move were reflected in the forex and share markets as the Euro and the European shares fell drastically, adding to the existing conundrum in the international business picture.