Italy's deficit-to-GDP ratio will
be set at 2.4% in 2019 to then drop to 2.1% in 2020 and 1.8% in
2021, according to the update of the DEF economic blueprint,
Premier Giuseppe Conte said after a government budget summit
Wednesday, responding to EU criticism.
Addressing a press conference, he said the budget had
"respected commitments, it is courageous and serious".
Conte said the debt-GDP ratio would drop to 126.5% from its
current 130.9% by 2021.
"We're not going to give up the measures in the government
contract," he said, referring to a basic income, pension
overhaul and flat tax.
The premier also said they estimated that unemployment would
fall to 7% "with these reforms".
Conte was speaking after a summit with the two
deputy premiers Luigi Di Maio and Matteo Salvini, Economy
Minister Giovanni Tria, Foreign Minister Enzo Moavero and
Cabinet Secretary Giancarlo Giorgetti for the second day
running Wednesday for talks on the budget and an update to the
DEF economic blueprint, which was OK'd.
Tria said Italy would close its growth gap with the rest of
the EU, which has been 1% for over 10 years, "in the first year,
in 2019" thanks to its new budget plan.
He said there would be additional investments of 0.2% in
2019, 0.3% in 2020, and 0.4% in 2021.
"This describes the quality of the budget: we're aiming to
have public investments as principal instrument to work on
growth".
Di Maio said said that with a basic income, citizenship
pension, job centres and funds for those defrauded by banks the
government would "repay the Italian people for so much thievery
and so much waste" over the years.
He also said business tax IRES would come down for those who
"hire and invest".
Interior Minister Salvini said there would be 10,000 hires in
the police forces in the new budget.
Tria said earlier that the government will gradually bring
down Italy's budget deficit after letting it rise to 2.4% in
2019 - an announcement welcomed in Brussels and by the financial
markets, although the EU said rules would nonetheless have to be
respected next year too.
The Milan bourse closed 0.84% up after losing over 5% over
the past five sessions while the German-Italian bond spread fell
from above 303 to 283 with a yield of 3.31% compared to
Tuesday's post-2014 high of 3.44%.
The League/5-Star Movement (M5S) government had previously
indicated it would run a deficit of 2.4% for the next three
years as part of budget plans that have been criticised by the
European Commission and have been followed by a big rise in
Italy's bond spread.
Tria said that "in 2019 there will be a deviation from
targets agreed with the European Commission by the previous
government (but) then there will be a gradual reduction in the
deficit in the following years".
The deficit will drop from 2.4% in 2019 to 2.1% in 2020 and
1.8% in 2021, government sources said.
"The aim is the eliminate the gap in (Italy's) growth with
respect to (the rest of) Europe and ensure a constant reduction
in the debt-to-GDP ratio at the same time," the minister told a
conference of the CSC research unit of industrial employers
confederation Confindustria.
Italy's big public debt of over 130% of GDP is the
second-highest in the EU's after Greece.
Tria said the government's management of the public finances
would not be "merry".
He added that the key pledges in the contract of government,
such as a pension overhaul bringing down the retirement age, a
two-tier flat tax and a 'citizenship wage' basic income, would
be brought in "very gradually" during the whole parliamentary
term.
European Economic Affairs Commissioner Pierre Moscovici
reiterated Wednesday that Italy risks breaking the Stability and
Growth Pact if it presses ahead with plans to run a budget
deficit of 2.4% of GDP next year.
"We have quite precise rules. They are not stupid," Moscovici
said on the fringes of the Economic Forum of the Americas at the
OECD's Paris headquarters.
"They say that the nominal deficit must be under 3% and the
structural deficit must improve.
"With 2.4%, there is a risk. It is possible that the
structural deficit is not on the path set by the Stability and
Growth Pact".
He added that "we will have the rules respected", while
stressing that a "crisis between Brussels and Italy would be
absurd".
He also welcomed the Italian government saying it will bring
the deficit down after 2019, having previously indicated it
would run a deficit of 2.4% for the next three years.
"The fact the the multi-annual trajectory has been revised is
a good signal," he said.
Moscovici also rejected suggestions by some Italian
government officials that Commission statements were fuelling
rises in the bond spread, saying "it is the fever that has
effects, not the thermometer".
Italy's League/Five Star government is Euroskeptic and
xenophobic, Moscovici added.
"Like the Hungarians, also the Italians have opted for a
decidedly Euroskeptic and xenophobic government which, on
migrant and budget issues, is trying to get out of European
obligations," he said.
Moscovici is "talking through his hat" in accusing the
Italian government of being xenophobic because there is "no
racism or xenophobia in Italy," Interior Minister Matteo
Salvini, head of the anti-migrant League party, retorted.
"Moscovici is talking through his hat, there's no racism or
xenophobia in Italy, but finally a government chosen by citizens
which has blocked migrant smugglers and shut the ports to
clandestines," said the deputy premier.
"We are fed up of the insults coming from Paris and
Brussels".
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