How Italy Leaves The Eurozone, Step By Step

Earlier today, Italy told the EU where to go with it budget demands. Expect the EU to huff and puff.

The EU demands Italy do something about its buildup of debt. In response, Italy dismisses 'implausible' EU forecasts, says budget is sound.

“There are no grounds for questioning the soundness and the sustainability of our reforms,” Prime Minister Giuseppe Conte said in a statement. “For this reason we consider any other type of scenario for Italy’s public accounts to be absolutely implausible.”

If Italy does not budge, the Commission could launch an “excessive deficit procedure” that could eventually result in fines, though these have never been levied on any country in the monetary union.

“The European Commission’s forecasts for the Italian deficit are in sharp contrast to those of the Italian government and derive from an inaccurate and incomplete analysis (of the budget),” said Economy Minister Giovanni Tria.

“We regret to note this technical slip on the part of the Commission, which will not influence the continuation of constructive dialogue with (it).”

Excessive Deficit Procedures Coming Up

Mercy, that sounds ominous, but I cannot any concrete example of the EU ever doing anything.

Reuters has a Factbox List of Key Dates, five of which have already passed with no consequences. Here are the remaining steps to laugh at.

  • Nov. 19: In the event, its budget were rejected by the Commission, the Italian government would have three weeks from the date of the EU opinion to submit a revised budget.
  • Dec. 3: Monthly Eurogroup meeting.
  • Dec. 10: The Commission would have three weeks, likely until Dec. 10, from the submission of Italy’s amended budget to adopt a new opinion in which it would describe Italy’s overall budgetary position and its impact on the whole eurozone.
  • Dec. 13: The European Central Bank’s Governing Council holds a monetary policy meeting that is set to wrap up its bond purchase program, a widely expected move that could, however, further increase Italy’s spiraling debt servicing costs.
  • Dec. 14: EU leaders at their regular end-of-year summit would likely discuss Italy’s budgetary plans if no solution was found at this stage, further increasing market and peer pressure on Rome.
  • Feb. 4-7: This is the week when the Commission is expected to publish its economic forecasts up to 2020, which would show whether EU calculations match Italy’s growth, debt and deficit projections which underpin budget targets. The data could pave the way to sanction procedures if EU and Italian data differed widely.
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Gary Anderson 4 days ago Contributor's comment

While there are radicals in Italy, what can anyone expect when the Eurozone is such a joke?