Populist Threat Will Spare Italy the Tough Medicine
The government’s brazen budget calls for action from Brussels. But officials won't want to fan the flames of rebellion.
The name of the game is chastise, not castigate.
Photographer: Alessia Pierdomenico/BloombergEurope’s effort to forge a monetary union has always been as much a political project as an economic enterprise. Greece has already shown that the need to keep the crusade on track means fiscal transgressors get off lightly; so Italy, which is a much bigger deal in the bloc both politically and economically, can expect a similarly muted response to its deficit defiance.
Italian Finance Minister Giovanni Tria said on Monday that his government is sticking to its 2.4 percent budget deficit target for next year, fully cognizant that it breaks the European Union’s rules. “The recent rise in government bond yields will be reabsorbed as the investors learn about all the details,” he said in a letter to the European Commission.