Italy sticks to 2019 budget goals for now

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Europe

The Italian government said on Monday it was sticking to its main 2019 budget goals for now as it awaits a cost analysis of its main spending measures, but left open the possibility of eventually cutting its deficit target.

Prime Minister Giuseppe Conte discussed the contested financial package with his two deputies, Matteo Salvini and Luigi Di Maio, against the backdrop of possible disciplinary action from Brussels unless the expansionary plans are altered.

“The objectives that have already been fixed are confirmed,” the three men said in a joint statement.

“As far as the on-going discussions with European institutions are concerned, we agreed to wait for the technical analysis of the proposed reforms which have the most important social impact to quantify precisely the cost,” they added.

They said any additional funds that might emerge from the cost review would be used primarily to boost investments. However, two government sources said the possibility of lowering the 2019 deficit target remained on the table.

The European Commission took the first step last week to disciplining Italy over the budget after Rome refused to change it, raising the stakes in a dispute that has alarmed the whole eurozone and could eventually lead to fines.

Hopes that Italy was poised to curb its spending plans set off a rally in financial markets.

Italy's benchmark bond-yield spread over the German equivalent fell to its tightest level in more than a month at some 279 basis points, while the Milan stock market rose by more than two percent.

Source(s): Reuters