Euro and Italian bonds sold as EU warns on Italy budget
The EU calls Italy’s draft budget an ‘unprecedented’ breach of EU fiscal rules; world stocks are generally lacklustre
London — Investors sold Italian bonds and the euro on Friday, with Italy’s bond yield hitting four-year highs as the EU called its draft budget an “unprecedented” breach of EU fiscal rules. Late on Thursday, the European Commission told Rome in a letter that planned government spending was too high and that its structural deficit would rise instead of fall, and that the country’s public debt would not fall in line with EU rules. Italy’s prime minister Giuseppe Conte defended the budget. EU authorities will send a formal warning letter that could lead to Brussels rejecting the draft before the end of the month. While it isn’t unusual for the EU to ask member countries for clarification on points of their budget plans, the sending of a formal letter and the tone of the comments were particularly strong, analysts said. “The letter was more sharply worded than usual. It described the budget as ‘an obvious deviation’ from prior commitments, on an ‘unprecedented’ scale,” Deutsche Bank res...
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