Italy to bow to Brussels, cut deficit targets

ROME: Italy’s populist government will bow to pressure from Brussels and reduce its budget deficit targets for 2020 and 2021 in a bid to reassure skittish markets, two Italian dailies reported yesterday.

After declaring last week it was setting the public deficit at around 2.4 per cent of gross domestic product (GDP) for the next three years, Rome now plans to reduce the targeted gap to 2.2 per cent in 2020 and two per cent in 2021, the Corriere della Sera and Repubblica dailies said.

Prime Minister Giuseppe Conte had sought to assuage concerns over the budget late Tuesday, by vowing to speed up Italy’s efforts to reduce its public debt which is at a sky-high level of 131 per cent of GDP.

The government has agreed to work to lower debt levels “consistently over three years”, Conte said in a statement after meeting other top ministers to discuss the issue.

He gave no numbers however, and officially the government said it would follow through with its original plans.

Conte and the leaders of Italy’s coalition parties, the far- right League and anti- establishment Five Star Movement, were set to meet again to discuss the issue further.

On Tuesday, League head Matteo Salvini, who is a deputy prime minister, threatened to seek damages from European Commission president JeanClaude Juncker for scaring off investors by attacking the budget plans.

The yield on Italian government bonds has spiked higher in recent days as worried investors demand more interest to hold onto Italian debt. — AFP