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'Stop austerity!' Italy leader in warning shot to EU chiefs over budget Rome is 'PROUD of'

Rome has been at loggerheads with EU chiefs over proposals for a deficit goal of 2.4 percent of GDP for 2019 – a figure that is three times the previous administration’s target.

The Italian Cabinet signed off an expansionary 2019 budget last night, in which they set out goals to boost welfare spending and slash the retirement age.

But the proposals have set the nation up on a showdown with authorities in Brussels over compliance with EU rules.

Speaking this morning, Mr Conte defended the spending plans as he described Italy as “an EU founder and a net contributor” in an attempt to downplay tensions.

He said: “Belonging to Europe is an essential part of the program to improve socio-economic conditions of Italians and Europeans.

“We are going to Brussels with a budget we are proud of and on which we want to dialogue without prejudice. Austerity is no longer viable.”

He added it was essential for Italy “to reduce the growth gap with the EU by focusing spending towards balance and stability”.

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Deputy Prime Minister Matteo Salvini also took aim at EU chiefs last night, saying he was “extremely happy” with its budget plans.

He said: “I am extremely happy, we are keeping our promises, slowly but bravely.

“We are dismantling the previous pension law, giving back the right to work to 400,000 Italians.

“We are not raising taxes of any kind for 2019.”

The Italian government is targeting a budget deficit of 2.4 percent in 2019.

While this is within the European Commission’s rules for budget deficits not to exceed three percent of GDP, it is still significantly higher than the 1.8 percent previously promised by the government.

Italy’s debt is already the second highest in the eurozone as a share of economic output after Greece, at about 131 percent of GDP.

Final approval of the spending plans has been delayed until today, with government sources saying there were tensions between the ruling coalition parties over plans for a partial tax amnesty.

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The Italian parliament voted in favour of the government’s deficit plan on Friday.

Economists are concerned about the proposals, with Thanos Vamvakidis, head of G-10 FX strategy at Bank of America Merrill Lynch, telling CNBC: “We believe that this budget cannot possibly be accepted by the EU, it is a clear violation of the fiscal rules.

“The Italian government has shown some signs they’re willing to compromise but they’re still far apart and we need some more market discipline.” 

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