European Commission rejects Italy’s 2019 budget
Alexandre Lantier and Marianne Arens
24 October 2018
Yesterday, the European Commission struck down the 2019 budget proposed by Italy’s far-right government, claiming that it violated Italy’s promises to the European Union (EU) to impose austerity, and demanding revisions. This is the first time that the EU Commission has ever demanded that an EU member state rewrite and resubmit its budget to the EU.
A violent struggle is set to unfold on the summits of European bourgeois politics, as both pro-EU and far-right populist forces fight to impose their version of austerity while trying to avert a financial panic that could provoke an Italian and global market crash. The central question is a perspective for independent political opposition by the working class, uniting workers struggles against austerity in Italy and across Europe. The EU austerity diktat and neo-fascist Italian Interior Minister Matteo Salvini’s nationalist demagogy are equally right-wing and hostile to the workers.
On October 18, the EU issued a letter denouncing Salvini’s “People’s Budget” as a “significant deviation” from previous plans, and demanding clarifications. While Salvini’s austerity budget is within the deficit limits of the EU’s Maastricht criteria, it sets out a deficit three times as high as the 0.8 percent of gross domestic product (GDP) pledged by the previous Italian government.
The EU letter triggered a sell-off in bond markets, and Economic Commissioner Pierre Moscovici pledged “constructive dialog” with Rome in order to prevent a crash. With Italian banks already holding an estimated €260 billion in bad loans from the last crash in 2008, Credit Suisse AG estimated that Italy’s banking system would face…