Boost for Italy as deficit falls

Italy, struggling to straighten out its finances, cut overspending to 1.0 percent of output in the second quarter, down from 2.2 percent in the same period last year, official data showed on Tuesday.

Boost for Italy as deficit falls
The Italian government said it is committed to containing the country's deficit. Photo:

In the first half of the year the public deficit fell to 4.1 percent of gross domestic product from 4.4 percent in the first six months last year.

But this latest figure after six-months is still substantially above the target ratio for this year.

The figures, from the Istat national statistics agency, showed that but for debt interest Italy would have a comfortable public surplus.

Italy, with the third-biggest economy in the eurozone after Germany and France, has to come up with a budget by next Wednesday, and is committed to containing the deficit to within the European Union limit of 3.0 percent of output by the end of this year.

The government said on September 30th that it had no choice but to put down a provisional deficit of 3.1 percent in its forecast.

This was mainly because of the political instability which had kept the country and investors on edge in recent months, until an abrupt about-turn last week by Silvio Berlusconi's opposition to support a vote of confidence.

However, the government also promised to make the necessary corrections in time.

The latest data showed that in the second quarter, if the cost of paying interest on the debt were excluded, the public-sector accounts were in surplus to the extent of 4.7 percent of output, or 0.9 percentage points better than in 2012.

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