Published: Fri, October 19, 2018
Worldwide | By Myra Stephens

Italian PM denies rift between governing parties over budget

Italian PM denies rift between governing parties over budget

Prime Minister Giuseppe Conte will seek to press his government's case with leaders including German Chancellor Angela Merkel, French President Emmanuel Macron and Commission President Jean-Claude Juncker during a summit in Brussels on Wednesday and Thursday.

The Italian cabinet on Monday signed off on an expansionary 2019 budget, boosting welfare spending, cutting the retirement age and hiking the deficit to set up a showdown with authorities in Brussels over compliance with European Union rules.

Italy's far-right Interior Minister Matteo Salvini denounced the "madness" of western sanctions against Russian Federation, during a trip to Moscow Wednesday, and launched a fierce attack on the European Union.

"Europe works according to pre-established rules before the arrival of governments", Juncker said. "Your votes give me strength to go to Brussels and say it's the Italians that decide, not them". We have worked on a project, more than on a budget, we have worked on a project that the country needs, that citizens need. The Italian government's growth forecasts may be seen as overly optimistic, meaning its deficit and debt may ultimately be even higher than planned.

He hit out at Brussels for its sanctions policy against Moscow and claimed Italian businesses had lost billions of euros as a result of the measures.

Italy submitted its budget draft at the last minute on Monday night, giving the Commission two weeks to respond, but it appears it won't need that long. "I am absolutely aware that the atmosphere is more tricky than in June, but I think we can use the time before December to clarify the position of some member states and our goal remains to have visible progress in December", Tusk said. This could be in breach of European Union fiscal rules that require Rome to lower its large public debt.

"The idea that this budget can blow up Europe is totally unfounded", he said.

"I come here because I am convinced that sanctions are economic, social and cultural madness", said Salvini, who leads the far-right League party and also serves as deputy prime minister. One of the key forecasts in the budget is that Italy's high debt to GDP ratio, of around 130 percent now, will decline to 126.7 percent of GDP in 2021.

The pressure from the Commission, and from financial markets, is straining the government in Rome, where Finance Minister Giovanni Tria lost his fight for a smaller budget deficit last month.

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