BERLIN, Mar 24 (AFP): The EU warned on Sunday of a new row brewing with Italy over its budget, barely a few months after both sides agreed on a hard-fought deal with Rome's disputed 2019 finances.
"I'm really worried. In no other EU member state has the economy cooled so dramatically.
Already in our winter forecast, we had expected Italy to post growth of only 0.2 per cent (in 2019)," said European Commission Vice President Vladis Dombrovskis.
"It shows clearly that the direction taken by the government in Rome is damaging for the economy.
The interest rates have risen, instability also," he told Welt am Sonntag newspaper, noting that investor confidence has failed to improve in the country.
Italy's public debt is a big problem and now sits at 2.3 trillion euros ($2.6 trillion), or 131 per cent of Italy's GDP -- way above the 60 percent EU ceiling.
After a bitter row, Italy's populist coalition government committed to not adding to its colossal debt load this year.
But Rome's projection for its 2019 budget was based on growth of 1.0 per cent of GDP, which international organisations now view as too optimistic.
The International Monetary Fund sees growth reaching only 0.6 per cent, while the European Commission's forecast is far more pessimistic, at just 0.2 per cent.
"Rome's growth forecasts are too optimistic," warned Dombrovskis.
"It doesn't make things easier that the spending programme decided by the government for 2019 will be pushed back and hit the budget in the coming year.
The Italian economy contracted in the fourth quarter of 2018 because of a slowdown in exports, plunging the eurozone's third-largest economy into recession and increasing the government's budgetary problems.
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