Analysts at Deutsche Bank notes that the European Commission Budget Commissioner Gunther Oettinger said “Italy’s draft budget for 2019 is not consistent with existing EU obligations,” indicating that the European Commission is likely to reject the country’s fiscal plan.
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“Oettinger will not be the official to make the decision or lead negotiations, but 10-year BTPs still sold off 9.5bps and the FTSE-MIB dropped -1.33% to underperform the other major European indexes. Separately, German Chancellor Angela Merkel said, without naming any country, that Euro area member states are responsible for their own budgets, have a duty to promote stability, and must stick to rules in the stability pact while adding that ensuring the stability of the euro region and its ability to withstand financial crises is a central goal of the German government. Elsewhere, Italy’s Finance Minister Giovanni Tria said the government will maintain collaborative dialogue with the EU regarding the country’s 2019 budget.”
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