Italy plans to spend an additional 14.3 billion euros ($14.5 billion) to shield firms and families from surging energy costs and consumer prices in what will be one of the last major acts of outgoing Prime Minister Mario Draghi.
The extra funding will come from higher-than-expected tax revenues and will not impact the public deficit target, which Rome in April confirmed at 5.6% of national output this year.
Draghi said on Tuesday that “autumn is expected to be very complex” and that he was ready to discuss ways to cope with the economic downturn with unions and business leaders.
“The government still has much to do,” Draghi, who remains in office in a caretaker capacity, said in a speech.
Draghi, who resigned last week paving the way for a snap national election on Sept. 25, has promised to approve the new aid package by early August.
Rome could repeat a 200 euro bonus paid in July to low and middle-income Italians in August, or make essential consumer staples such as pasta and bread temporarily exempt from VAT sales tax.
Other possible measures include subsidising energy supplies for low-income families and energy-intensive enterprises.
The government said it would seek parliamentary backing to use the budget headroom to fund measures aimed at “countering the effects on households, businesses and public bodies of energy costs and the COVID-19 pandemic.”
Part of the funds will also go to tackle the drought emergency that is affecting parts of the country.
The new package comes on top of some 33 billion euros budgeted since January to soften the impact of sky-high electricity, gas and petrol costs exacerbated by the Ukraine conflict, which are weighing on the growth prospects of the euro zone’s third-largest economy.
Italian EU-harmonised consumer prices index (HICP) stood at 8.5% in June, up from the 7.3% increase in May. Core inflation (net of fresh food and energy) was running at +3.8% year-on-year on the HICP index in June, up from 3.2% in the month before.
via Reuters
