November 21, 2018 / 11:51 AM / 19 days ago

Italy sleepwalking into instability with 2019 budget: EU's Dombrovskis

Valdis Dombrovskis attend a news conference with Greek Finance Minister Euclid Tsakalotos (not pictured) at the Finance ministry in Athens, Greece, June 15, 2018. REUTERS/Costas Baltas

BRUSSELS (Reuters) - Italy is sleepwalking into instability as its profligate 2019 draft budget is more likely to cut growth than boost it and borrowing costs for Italians are likely to rise, European Commission Vice President Valdis Dombrovskis said on Wednesday.

The Commission said earlier that Italy’s failure to cut its huge public debt in line with EU rules warranted starting an excessive deficit procedure — an EU disciplinary process that could end in fines of 0.2 percent of GDP for Italy.

“The impact of this budget on growth is likely to be negative in our view. It does not contain significant measures to boost potential growth, possibly the opposite,” Dombrovskis said.

“With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability,” he said.

Reporting By Jan Strupczewski; editing by Philip Blenkinsop

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