October 18, 2018 / 1:43 PM / a year ago

UPDATE 1-EU to deliver formal warning to Italy over draft budget -source

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BRUSSELS, Oct 18 (Reuters) - EU authorities will raise their concerns with Italy on Thursday over fiscal rule breaches in its 2019 budget, an official said, sending a formal warning letter that could lead to Brussels rejecting the draft before the end of the month.

Economic Commissioner Pierre Moscovici will hand the consultation letter to Italian Finance Minister Giovanni Tria in Rome.

The EU official told Reuters the Commission was expecting a reply from Italy, and possible changes to the draft budget, before taking any further action.

Italy is pressing ahead with an expansionary budget that will boost its deficit and risks further increasing its huge public debt pile.

Other euro zone countries will also receive consultation letters on their draft budgets, the official said, but only in the case of Italy will the Commission highlight that there is a serious deviation from EU fiscal targets.

“Italy’s is a case apart,” the official said. Under EU rules, the letter to Rome could precede a Commission rejection of the Italian budget by Oct. 29.

With other countries, which the official declined to name, the Commission will raise doubts about possible fiscal risks. But only Rome will receive a letter on Thursday, while other countries will be informed from Friday. (Reporting by Francesco Guarascio; editing by John Stonestreet)

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