Published: Wed, October 24, 2018
Global News | By Blake Casey

Austrian Chancellor Kurz Urges EU to Stop Italy Taking Europe 'Hostage'

Austrian Chancellor Kurz Urges EU to Stop Italy Taking Europe 'Hostage'

This is the first time the European Commission has ever rejected a country's budget proposal. "But no one will take one euro from this budget".

Chancellor Kurz, who now chairs the rotating presidency of the Council of the European Union (EU), hit out against the Italian populist government budget saying: "Austria is not ready to support the debt of other states, while those states are actively legitimating market uncertainty".

Moscovici said the Commission does not question the aims of the Italian government, which says that years of austerity and spending cuts have left unemployment high and growth anemic.

The Italian government wants to spend more on welfare, infrastructure and reduce the retirement age.

One hundred basis points of the spread between Italian ten-year government bond yields compared to their German equivalents is linked to the misplaced fear Italy could leave the euro, Deputy Prime Minister Luigi Di Maio said on Monday.

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Italy immediately replied that it would stick to its plans and that the EU Commission had no right to meddle.

Despite multiple Commission officials coming out against the budget, including President Jean-Claude Juncker who warned that the budget could lead to "violent counter-reactions", Interior Minister and leader of the League Matteo Salvini has stood firm on the issue. "And excessive debt makes your economy more vulnerable to future crisis", Dombrovskis said.

Brussels argues the hike would far exceed the spending limits agreed with the European Union and further increase Italy's national debt, which is already the highest in the EU.

Speaking just before the EC's budget rejection was announced, Klaus Regling, the head of the European Stability Mechanism, said concerns were exaggerated.

"The (Italian) fiscal plans are not in compliance with the legal framework, but Italy is not the next Greece", Regling told journalists in Luxembourg.

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