The Italian government has made four billion euros’ worth of savings by amending it’s big-spending ‘people’s budget’, deputy prime minister Matteo Salvini said today.
The cost-cutting is needed to stop the European Union from opening disciplinary procedures, including possible fines, over the big-spending budget plan for 2019
The coalition government has reached “an agreement on further fiscal reductions”, Matteo Salvini said, as the clock ticks down on finalising the budget law, which must be passed by the end of the year.
Asked if the last-minute accord between the ruling parties, the League and the Five Star Movement, would be enough to appease Brussels, economy undersecretary Massimo Garavaglia said: “We are optimistic.”
The savings reportedly come from cuts to the ruling parties' flagship proposed reforms, which are also said to be the most expensive policies, including a lower retirement age and income support for low earners.
The European Commission in October rejected the 2019 budget, warning that the plan to hike deficit spending despite the country's mammoth debt was a clear breach of EU fiscal rules.
Prime Minister Giuseppe Conte has made an offer to the European Commission to lower Italy's deficit to 2.04 percent of GDP in 2019, but EU officials said it was “not enough.“
The government insists it needs to spend big to kick-start a sluggish economy, but Brussels says it will not deliver the growth promised after years of austerity measures and worse still, will only add to Italy's debt mountain.
The government also said last week that its populist budget was needed to “prevent social unrest” on the scale seen in Paris recently. Conte said austerity-based economic policies have “failed.”
If an agreement is not reached, Italy could find itself the target of an EU excessive eficit procedure, which could ultimately lead to fines of up to 0.2 percent of the nation's GDP.