Macron hands European Union new headache in fight over Italian budget

Bloomberg

French President Emmanuel Macron has emboldened Italy’s populists in their standoff with the European Union by embarking on a spending spree of his own.
The promises Macron unveiled in a bid to defuse the Yellow Vest protests, from a 100-euro ($114) a month hike in the minimum wage to abolishing a tax on pensions, could play into the hands of Italian Deputy Premiers Matteo Salvini and Luigi Di Maio as they challenge EU budget rules to start delivering on election promises.
France’s budget deficit could defy the very same rules. As the EU pressures Italy to retreat from a deficit of 2.4 percent of GDP next year, Macron’s plan could push France’s to 3.5 percent, according to initial estimates. Italy has periodically complained that it is singled out by the EU Commission while France gets special treatment.
“Macron’s spending will encourage Salvini and Di Maio,” said Giovanni Orsina, head of the School of Government at Rome’s Luiss-Guido Carli University. “Macron was supposed to be the spearhead of pro-European forces, if he himself is forced to challenge EU rules, Salvini and Di Maio will jump on that to push their contention that those rules are wrong.”
Salvini and Di Maio, euroskeptics who’ve both expressed solidarity with France’s grassroots demonstrators, are already resisting pressure from Premier Giuseppe Conte and
Finance Minister Giovanni Tria to yield ground to the European Commission, the EU’s executive arm, over the deficit target for next year.
Conte will meet commission head Jean-Claude Juncker in Brussels for another round of budget talks on Wednesday, ahead of a summit of European leaders on the two following days. Salvini and Di Maio are refusing to cut the deficit to below 2.2 percent, newspaper La Stampa reported.
Conte and Tria have been pushing for a deficit target at about 2 percent, with both eager to keep Italy in good standing with the EU, according to government officials.