Italy to Resist Budget Pressure Ahead of EU Elections

Italy said on Thursday it would resist pressure from Brussels to revise its big-spending budget, effectively daring EU authorities to punish it with fines ahead of May’s European parliamentary elections.

Leaders of Rome’s populist government said they would press ahead with expanding the deficit next year, a day after the European Commission kicked off disciplinary procedures against Italy over that plan in a dispute that has alarmed the whole euro zone.

“We will not take a backward step,” Deputy Prime Minister Matteo Salvini told state-owned television Rai. “We’re not spending this money at random. The idea is for Italy to grow.”

Salvini wants his League – one of two parties that formed a governing coalition in June – to help trim the European Union’s powers over member states and spearhead a populist attack on the European parliament at next year’s elections.

His coalition partner and co-deputy prime minister, Luigi Di Maio of the anti-establishment 5-Star party, also said Rome would not back down before then.

“I rule out spending-cutting measures before the EU vote,” Di Maio told journalists in parliament, saying many European countries would have reasons to change the “rules of the game” in Europe thereafter.

The government argues a budget expansion will boost economic growth and in turn tax revenues, bringing down its 2.3-trillion-euro ($2.63 trillion) public debt, which represents about 130 percent of economic output.

The Commission disagrees, saying Italy must do more to ease its debt burden, proportionally the euro zone’s second highest after Greece.