Conte tries to overcome budget coalition’s impasse – EU Commissioner warns Italy that it must keep its national debt under control
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Italian Prime Minister Giuseppe Conte met his top ministers on Friday to try to overcome an impasse over the government’s first budget between the ruling parties and the economy minister who is resisting their plans to boost spending.
The coalition has to set growth, deficit and debt targets for next year’s budget by Sept. 27. The anti-establishment 5-Star Movement has asked for a basic income for the poor, and its coalition partner, the far-right League party, wants tax cuts for individuals and companies. Both agree the retirement age should be lowered.
However, Economy Minister Giovanni Tria, an academic who is not affiliated to either party, wants to set the 2019 budget deficit at 1.6 percent of GDP, according to a government source, while sources from the 5-Star and the League have told Reuters they want it as high as 2.5 percent.
“The meeting was useful and positive,” the League’s leader Matteo Salvini said after leaving Conte’s office. Riccardo Fraccaro, 5-Star’s minister for relations with parliament, said the coalition was on “the right path” in drawing up the financial bill.
EU Commissioner for Economic and Financial Affairs Pierre Moscovici has again warned Italy that it must keep its national debt under control.
Italy’s populist government will have to submit its draft budget for next year by mid-October.
The Commission could reject it if it decides it is out of line with EU rules, a power that the EU executive has so far never used.
“I urge all the government to be clear and to make sure that Italy stays where it has to stay – at the core of the euro zone as a strong, credible country willing of course to secure that its debt is under control,” he told Euronews.
But whilst Economy Minister Giovanni Tria wants to cut expenditure, he is under pressure from the two ruling parties to increase it as they seek to fulfill their election campaign promises. Tria is an academic and is not affiliated to either the anti-establishment 5-Star Movement or the far-right League party.
The possibility of expenditure increasing has revived concerns in the financial markets.
Italy’s debt is around 131 percent of its gross domestic product, the highest in the EU behind Greece.
