,
9 tweets,
6 min read
Read on Twitter
THREAD: @EU_Commission could open Excessive Deficit Procedure against #Italy within the next few weeks. This is much earlier than generally understood. As @AlvaroISLM and I explain in this @piie blogpost piie.com/blogs/realtime… a sanction could be imposed at the same time
2/ Until this 10/18 letter ec.europa.eu/info/sites/inf… from @EU_Commission, it was generally understood that an EDP in the corrective arm of the Stability and Growth Pact (or a Significant Deviation Procedure in its preventive arm) could only be opened in 2019
3/ The basic reason for that understanding was that both levers of the SGP could be activated against Italy but based on fiscal outcomes rather than on fiscal plans as explained by @gregclaeys and Antoine Mathieu-Collin in this @bruegel_org post bruegel.org/2018/10/italys…
4/ With budget data out-turns for 2018 becoming available only in 2019, the informed view as reflected in @lucasgttenberg's thread or @JeremyCliffe's piece in @TheEconomist economist.com/europe/2018/10… was that this was going to be a slow moving process
5/ But the 10/18 letter changes the speed as it argues that @EU_Commission earlier conclusion that an EDP was not warranted despite prima facie evidence of noncompliance in 2017 with the debt reduction rule may need to be reviewed "in light of the planned significant deviation"
6/ So a debt-based EDP could be launched as early November 2018 when the Commission will publish its autumn forecast. The rationale would be that the new fiscal plans for 2019 change the @EU_Commission's assessment for compliance with the debt rule of the SGP in 2017
7/ If this were to happen Italy would be in the corrective arm of the SGP. @EU_Commission could impose an immediate sanction in the form of an interest bearing deposit if @EU_Commission considers that this is a serious non-compliance with the SGP ec.europa.eu/info/publicati… (p.84)
8/ Note also that "the lodging of a non-interest bearing deposit is to be considered adopted unless the Council decides to reject the Commission’s recommendation within ten days, using qualified majority voting" END of THREAD
Addendum:
