The European Commission also warned that Italy's deficit would balloon in 2019, due to a spending boost planned by Rome's populist government that blatantly defies EU rules on expenditure.
In its latest forecasts, the European Commission expects growth in the currency bloc of 2.1 percent this year, followed by 1.9 percent in 2019, lower than the 2.0 percent predicted in its last assessment in July. Growth is expected to continue to decline in 2020 to 1.7 percent.
The commission, the EU's executive arm, cautioned that “there is a high degree of uncertainty surrounding the forecast and there are many interconnected downside risks”. These yet unseen dangers “could amplify the others and magnify their impact,” it warned.
According to Brussels, Italy's deficit will reach 2.9 percent of its gross domestic product (GDP) next year, well bigger than the 1.7 percent in its previous forecast.
Crucially, the EU believes Italy will only grow by a mere 1.2 percent in 2019, instead of the more optimistic Italian forecast of 1.5 percent.
Rome has unveiled a massive spending boost for 2019 in a budget that was rejected by the commission last month in an unprecedented move.
Photo: Filippo Monteforte/AFP