Austria's Kurz Raises Pressure on EU to Reject Italy's Budget

(Bloomberg) -- Austrian Chancellor Sebastian Kurz urged the European Commission to reject Italy’s budget and prove it has learned from the Greek debt crisis.

“Austria isn’t ready to stand in for the debt of other states while those states are actively condoning market uncertainty,” Kurz said in an emailed, joint statement with Finance Minister Hartwig Loeger. “If there are no amendments, the European Commission must reject the budget.”

Italy has been under financial-market pressure since the coalition government pushed for a higher-than-expected deficit in its budget, damaging investor confidence in its ability to reduce its 2.3 trillion-euro ($2.7 trillion) debt load and setting it on a collision course with European authorities. Moody’s cut Italy’s credit rank by one step to Baa3, its lowest investment-grade rating, on Friday.

At some 130 percent of output, Italian sovereign debt is hardly sustainable even now, and the planned deficit of 2.4 percent of gross domestic product would exacerbate the situation, Loeger said.

“Italy takes the European Union hostage if the EU doesn’t step on the brake,” he said. “A rule violation would open the door for other nations to do the same.”

©2018 Bloomberg L.P.