HIGH NOON FOR THE EU AND ROME

Italy and the EU are on a collision course. After unexpectedly sweeping to power in elections earlier this year, Rome’s populist-led coalition government has committed to drastically increase government spending next year, in part to deliver on outsized promises made during the campaign.


A budget proposal making its way through Italy’s parliament would see the country’s deficit balloon to 2.4 percent of GDP, three times the previous government’s projection. But with a debt load over 130 percent of GDP, more than twice the limit proscribed by EU rules, Rome can hardly afford to be loosening the purse strings.

Next week the government will officially submit its proposal to the European Commission, which is responsible for certifying EU members’ compliance with collective spending commitments. Brussels has already begun to sound the alarm bells, and the European Commission may well take the unprecedented step of sending the budget back to Rome for reconsideration.

Such a step would set up a big and protracted fight between the EU and the bloc’s fourth-largest economy. Italy’s caustic far-right deputy prime minister, Matteo Salvini (pictured above), is gearing for a fight. On Monday, Salvini delivered a biting speech in which he called the EU’s top officials “enemies of Europe” and promised not to back down.

For Brussels, there are no good options—a decision to push back forcefully risks further inflaming populist sentiment in Italy, while a failure to react could spark a backlash in Europe’s wealthier northern countries, which view Rome as a perennial mooch. The inevitable collision will further deepen Europe’s political divides at a moment when it already has its hands full with Brexit andgrowing illiberalism on its Eastern flank.

The danger to informal workers grows: Coronavirus lockdowns have created a world of uncertainty for businesses and workers around the world. But one group of people that could be hit particularly hard are those working in the so-called "informal economy," where workers lack formal contracts, labor protections, or social safety nets. Nowhere is this challenge more widespread than in Africa, where a whopping 85 percent of the work force toils in the informal sector. These workers, which include street vendors, drivers, and the self-employed, don't have the luxury of working from home, which makes social distancing unviable. As a result, many continue to go to work, risking exposure to the virus, because not turning up is often the difference between putting food on the table and starving. What's more, even where governments are trying to provide support, many people lack bank accounts, complicating efforts to get them aid. In Nigeria, for example, some 60 percent of people do not even have a bank account, according to the World Bank.

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As Europe inches past the peak of COVID-19 deaths and the US slowly approaches it, many poorer countries are now staring into an abyss. As bad as the coronavirus crisis is likely to be in the world's wealthiest nations, the public health and economic blow to less affluent ones, often referred to as "developing countries," could be drastically worse. Here's why:

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What's the new normal going to look like? Now that numbers are at least plateauing, if not leveling off in hard hit countries in Europe. An effective lockdown may last 4 - 8 weeks. Once you start pulling back on quarantine measures, what's life look like? What's the economy look like? The idea that life is back to normal anytime soon is really, really overstated.

Assuming workplaces get fully functional with suitable personal protective equipment, feel comfortable that we're not going to get significant additional cases. In the workplace, you organize social distancing in offices, you give people more flexibility on work from home, and everybody in contact regularly with people gets masks. You should be able to get to that point within 3 months in the world's developed economies. They're there functionally in China. That allows you to get the economy going again.

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Ben White, Chief Economic Correspondent for Politico, provides his perspective on the coronavirus-related news in US politics: What's the coronavirus update?

Well, we've gotten at least a little bit of good news that perhaps the rate of deaths in New York City is plateauing and may start to come down. God willing, we'll see if that comes to pass. Also, some indications that if we keep social distancing in place through the end of May, we could see fewer deaths than we worried about and fewer hospital beds need it. So, God willing, that happens.

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