European Commission Vice President Jyrki Katainen said Thursday that it was not too late for the Italian government to change its budget plans, suggesting them should be made "credible". The Commission has expressed concern that the government's plan to let Italy's budget deficit rise to 2.4% of GDP next year risk leading to a breach of the EU rules. "It is not too late to maintain stability, it is not too late to ensure that economic growth continues in Italy and it is not too late to show that the public finances are on a credible path," Katainen said.
The vice-president for growth said the EC was not seeking to depict things as worse than they are to provoke the markets.
"We are trying to remain pragmatic and grounded in the facts," he said. "I hope we will have good cooperation with the Italian government over this". Concerns about the League/5-Star Movement's economic policy have led to tension on the financial markets.
The government has said this is caused by prejudice against the executive and argues that criticism of the budget plan fails to account for the way it will bolster growth and, in the process, bring down the debt-to-GDP ratio. Katainen warned that the "situation is very fragile" adding that "no one wants to situation of instability on the markets, which would be negative for the Italian and for other European countries, who could suffer contagion".
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