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Italy Asks EU to Delay Debt Decision Until Fall, Repubblica Says

Italy Asks EU to Delay Debt Decision Until Fall, Repubblica Says

(Bloomberg) -- Italian Prime Minister Giuseppe Conte may be nearing an agreement to push back a European Union decision on an excessive deficit procedure to September or October, la Repubblica reported Friday.

Italy may make its case for a delay based partly on better-than-expected 2019 accounts, while the EU could see advantages to having access to more complete numbers, the newspaper said.

Delaying a decision on the infringement procedure to the autumn would mean it coincides with the start of work on the 2020 budget, which could escalate tensions between Deputy Premiers Matteo Salvini and Luigi Di Maio. The two populists have rival priorities -- tax cuts for Salvini’s pro-business League, a minimum wage for Di Maio’s anti-establishment Five Star Movement.

Italian 10-year bond yields fell toward the year’s lows touched earlier this month, dropping by four basis points to 2.1%. The spread over those on their German peers, a key gauge of risk in the country, also dropped to 241 basis points, close to the lowest level since September.

A third element also suggested that crunch time for the administration will be pushed back to fall, with Corriere della Sera reporting that Salvini has given the government four months to pass his party’s program. That would offer some breathing space to his partners who’ve faced incessant pressure from Salvini’s lieutenants to pull the plug on the government and force early general elections.

Still, if the government collapses in September or October it may be impossible for the next administration to approve a 2020 budget by the end of the year, hampering efforts to boost the economy and bolster the public finances.

--With assistance from John Ainger.

To contact the reporters on this story: Jerrold Colten in Milan at jcolten@bloomberg.net;John Follain in Rome at jfollain2@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Ben Sills

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