In an unprecedented move, the European Commission rejected Italy’s 2019 budget and told Italian policymakers that it must revise the proposed budget. The European Commission is the European Union’s executive arm, and it has been threatening to dismiss the budget in recent days due to a controversy over the deficit which was set to be 2.4 percent of the country’s annual output. Italy had previously committed to a deficit goal of just 0.8 percent of the country’s annual output. Italy will now have three weeks to revise its budget. This was the first time that the European Commission has rejected a member country’s budget.
European Commission Vice President for the Euro and Social Dialogue Valdis Dombrovskis said that the proposed budget put Italy in danger of becoming trapped by debt. He also noted that in 2017, the country spent the same amount on education as it did on its debt.
The euro was trading flat against the dollar despite the drama, partially due to pressure on the dollar after a rough day on Wall Street on Tuesday. The euro was trading at $1.1469 as of 12:55 p.m. HK/SIN on Wednesday. The dollar also struggled against some of its other primary trading pairs. The Australian dollar was up 0.3 percent against the dollar and the pound was up a modest 0.05 percent against the dollar just after noon in Asia. The dollar did manage to post gains against the yen, trading up 0.17 percent.