October 18, 2018 / 5:22 PM / a year ago

EU says Italy budget poses no stability risk to bloc

LONDON (Reuters) - Italy’s planned budget plan does not pose a “Greek-like” threat to European Union financial stability but Brussels was looking at what could be the “next steps”, the bloc’s financial services chief said on Thursday.

Asked if Italy was facing a crisis like Greece did during the euro zone debt crisis, Dombrovskis said: “I would not jump on that kind of speculation”.

“First and foremost we are not in times of crisis.”

The euro zone economy has been growing for several years, and the banking system is stronger than it was during the financial crisis, he told a Politico event in London.

The Italian government has unveiled the core of its expansionary multi-year budget plan, raising the target for the fiscal deficit to 2.4 percent of gross domestic product next year, three times the 0.8 percent goal set by the previous center-left administration.

Dombrovskis said he had sent a letter to Italy expressing concerns about the budget plan.

He said the facts were clear that Italy was substantially deviating from the medium-term budgetary objectives.

“That is exactly the content of our letter,” Dombrovskis said, adding that he was now looking at what the European Commission could decide as potential next steps.

Reporting by Huw Jones; Editing by Andrew Heavens

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