Scholz Says Italy Must `Proceed Cautiously': Eurogroup Update

(Bloomberg) -- Euro-area finance ministers gathering in Brussels on Monday will discuss countries’ spending plans but their talks will likely focus on Italy’s escalating budget standoff with the European Union as the bloc waits for the government in Rome to respond to the unprecedented rebuke it received two weeks ago. Time stamps are Brussels time.

Moscovici says new draft budget is ‘necessity’ (10:19 p.m.)

“We’ve asked for the submission of a new draft budgetary plan or revised draft budgetary plan,” Commissioner for Economic Affairs Pierre Moscovici said in the press conference following the Eurogroup. “We expect a new and revised DBP by the 13th of November and that is a necessity.”

Eurogroup to hold extra meeting in November (9:50 p.m.)

“On Nov. 19 we’ll hold an extraordinary Eurogroup here in Brussels and this meeting will be mostly dedicated to euro-area reform,” Eurogroup President Mario Centeno tells reporters after the meeting.

Eurogroup releases statement on Italy (9:40 p.m.)

The finance ministers released their statement on Italy, saying: “We agree with the commission assessment,” and that “the focus on sufficient debt reduction and the path to the medium-term budgetary objective are an integral part of the stability and growth pact.”

“We look forward for Italy and the commission to engage in an open and constructive dialogue and for Italy to cooperate closely with the commission in the preparation of a revised budgetary plan which is in line with the SGP,” according to the statement.

Italy not currently changing budget, Tria says (9:28 p.m.)

Tria told reporters after the meeting ended that his government wasn’t in the process of changing its budget, but that it was still committed to pursuing a dialogue with the commission.

He also expressed optimism that Italian bonds would recover. “We hope that the spread will narrow when the market understands our strategy,” Tria said.

Italy Signals Willingness to Cooperate (7:30 p.m.)

Rome remains committed to reduce its debt ratio and hopes to reach a compromise with the European Commission, Finance Minister Giovanni Tria told his peers at the Eurogroup, according to an Italian government official. Tria also noted that there have been other countries which deviated from the rules in the past, according to the same official.

Eurogroup calls on Italy to cooperate (6:58 p.m.)

The finance ministers agreed with the EU Commission’s assessment of Italy’s budgetary plans and called on the government to “cooperate closely with the commission in the preparation of a revised budgetary plan that is in line with the Stability and Growth Pact,” according to a person familiar with the Eurogroup discussions in Brussels on Monday.

Scholz Warns Italy to ‘Proceed Cautiously’ (4:05 p.m.)

German Finance Minister Olaf Scholz says a nation like Italy with debt worth 130 percent of GDP “has to proceed far more cautiously” and that euro-region members must follow similar budget strategies to foster financial stability.

“If you have a very high debt, you have to be much more cautious as those who have a reduced debt related to GDP,” Scholz told reporters. “The proposals that the Commission has put forward and that are being discussed now with Italy are friendly ones.”

Report on Italian Sanctions on Nov. 21 ‘Fake News’ (3:50 p.m.)

Asked if the EU Commission has made a decision to impose financial penalties against Italy on Nov. 21, Commissioner for Economic Affairs Pierre Moscovici said: “Absolutely not. Let’s not jump to conclusions. Let’s just respect the procedure. If the idea is that we’ve already taken decisions, it’s fake news. It’s the wrong idea. We are walking step by step in the spirit of dialogue but of course according to the rules.”

Centeno: Hoping Italy Gets Budget in Line With Rules (3:10 p.m.)

Eurogroup President Mario Centeno said the finance ministers will discuss the European Commission’s opinion on Italy’s spending plans and not take any decisions today as the bloc is in the process of getting a reply from the Italian government.

“We are looking forward to very constructive discussion and hopefully we will get a new draft budget plan and then come back to this in December,” Centeno told reporters in Brussels.

Slovakia: Italy’s Behavior Puts EMU Plans at Risk (2:52 p.m.)

The Italian government is putting the EU’s euro-area reform goals in jeopardy, Slovak Finance Minister Peter Kazimir said.

“We are a rules-based club, and it makes us more resilient and stronger,” Kazimir told reporters in Brussels. “We must complete the EMU architecture. And I’m afraid the Italian government’s steps and approach is putting these goals at risk.”

Dombrovskis: Italy’s Plan ‘Substantially Deviating’ (2:22 p.m.)

The discussion comes as Italy is asked to submit revised spending plans by Nov. 13, after the European Commission essentially rejected the country’s budget for 2019, saying that it constitutes a clear deviation from commonly agreed fiscal rules.

In an interview with Bloomberg TV, European Commission Vice President Valdis Dombrovskis cited the risk that Italy’s economy might “slow even further” under the current plan. “Italy’s budget is substantially deviating from the requirements so it would also require substantial adjustment,” he said.

Coming up:

  • Eurogroup starts at 15:00 CET in Brussels
  • Press conference expected to begin at 20:30 CET

Earlier:

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