Italy rallies over spending plans

ITALY’S stock market rallied yesterday as hopes grew that its coalition government will back down in a row with Brussels over spending plans.

The Milan exchange rose 2.5pc on reports that officials would be willing to trim its 2019 deficit target to around 2pc of its annual economy.

In September it announced plans to run a budget deficit of 2.4pc next year – a major increase on this year’s deficit target of 1.6pc. It sparked fears Italy will be unable to repay its debts, and was in breach of European union rules.

Ministers were due to meet last night to discuss the move.

A rethink could mean rome avoids disciplinary action from the Eu, but it is unclear if the downward revision would be enough to satisfy the European Commission.

The nation’s anti-establishment ruling coalition was elected on pledges of a big spending boost, prompting analysts to worry the country will be living far beyond its means. A downturn in Italy would reignite fears over the future of the euro.