Italy's Salvini Gives EU Rare Praise on Populist Budget

(Bloomberg) -- Euroskeptic Deputy Premier Matteo Salvini, usually a virulent critic of the European Union, praised its approach to negotiations over his populist government’s spending plans, while insisting it cannot ask Italy for a specific deficit target.

Salvini, who has long railed against “eurocrats” in Brussels, flagged the Rome administration’s readiness to compromise. It faces possible fines amid concerns from the European Commission and investors about the country’s debt mountain, the biggest in the euro area.

“I am pleased that finally in Brussels there is a constructive attitude," Salvini, who is also leader of the anti-migration League, told RTL radio.

Still, he said it’s unrealistic of the commission to demand hard and fast spending limits when the government has so much work to do. “When you enter a supermarket, they don’t ask you what the total will be at the end,” he said.

EU member states last week endorsed the commission’s assessment of Italy’s debt load and said that a so-called excessive deficit procedure is warranted. That paves the way to formally open the process for the disciplinary procedure as early as next month.

1.9 Percent

“Technical experts are refining the numbers and then the number will come out, I don’t spend my time” with Premier Giuseppe Conte and fellow-deputy premier Luigi Di Maio “saying 2.3 or 2.7 percent,” Salvini said.

The commission has rejected a 2019 budget plan which sets a deficit target of 2.4 percent for next year.

Conte, who has been striving for a conciliatory approach to Brussels, is expected to hold more talks on the budget with his two deputies later Monday. Italian media reports say the 2019 deficit target may come down to as low as 1.9 percent.

A sizeable cut to the deficit target would require both Salvini and Di Maio to dilute or delay their main election pledges. The two leaders are anxious to be seen delivering on their promises before next May’s European Parliament elections, which they are portraying as a contest between national sovereignty and an interventionist EU.

‘Tone Changed’

Both Rome and Brussels signaled warmer relations. “The tone of discussion has changed,” commission vice president Valdis Dombrovskis told Bloomberg Television. “Indeed, Italian authorities signal that they are ready to make adjustments to their 2019 budget.”

Declining to discuss “exact figures” the commission is seeking, Dombrovskis reiterated the budget needs a “substantial correction” and added he will meet Finance Minister Giovanni Tria later Monday. Finance ministers from the euro area will be meeting in Brussels, with the Italian budget standoff one of the key topics.

After meeting commission head Jean-Claude Juncker on the sidelines of the Group of 20 nations summit in Buenos Aires, Conte also struck an optimistic tone Saturday.

“We are working on hypotheses with the European Union,” Conte said. “We trust that in coming days we will be able to discuss a technical solution.” Conte added that fines on Italy “would not be convenient for Europe, because we are in the same boat. When you’re in the same boat you want to get to a safe harbor.”

©2018 Bloomberg L.P.