Brentley Maddox Global - Italy's Budget Challenge Threatens to Derail Eurozone Reform
Brentley Maddox Global - Italy's insistence on high spending on top of high levels of debt poses a problem for planned eurozone reforms.
TAIPEI CITY, Taiwan, December 5, 2018 (Newswire.com) - Analysts at Brentley Maddox Global say the eurozone is facing significant challenges as it tries to implement planned reform. With widespread political uncertainty and market turmoil due to Brexit and the rapidly escalating US-Sino trade war, the recent standoff with Italy over its flouting of eurozone fiscal rules threatens to set back plans to institute economic safeguards for the eurozone next month.
Some analysts feel that the recent showdown with Italy over its unacceptable budget indicates that the greatest challenge facing the eurozone is its politics and not its finances.
In October, Italy submitted its budget proposal for next year, but due to serious noncompliance issues, the European Commission rejected the draft, giving Italy 3 weeks to submit an amended budget.
Although the European Commission has expressed valid concerns regarding the impact of Italy's plans to spend more amid high debt levels, Brentley Maddox Global analysts say Italy has refused to comply with the Commission's request and has stated that it will press ahead with its spending proposals for next year.
Italy has also rejected a proposal put forward by France and Germany for a eurozone budget that could be a significant step for the eurozone reform package, saying that it does not cater to the needs of the Italian economy.
Analysts at Brentley Maddox Global say that when Eurozone finance ministers meet early next month, they will likely decide to delay many of the planned reforms until issues with Italy's budget is resolved.
Source: Brentley Maddox Global