Italy's Government Endorses Draft Budget That Would Widen Deficit
October 15 2018 - 05:24PM
Dow Jones News
By Giovanni Legorano
ROME -- Italy's government late Monday approved a draft budget
law for next year, confirming a set of expansionary measures that
could lead to a fast-rising deficit and a conflict with the
European Union.
The government, a coalition of the antiestablishment 5 Star
Movement and the far-right League, has rattled financial markets in
the past month with its budget plans, with investors demanding
significantly higher interest rates to buy the country's bonds.
The full draft budget law will be sent to the Italian parliament
by Saturday. Lawmakers will need to approve it by the end of the
year.
The planned measures included in the draft law are set to widen
the budget deficit to 2.4% of gross domestic product, in defiance
of EU rules that require a shrinking deficit. EU officials fear the
real deficit could be much higher than 2.4%, according to people
familiar with the matter.
Rome said it would raise welfare and pension spending and cut
taxes, despite the negative reaction from investors and Brussels to
its proposals.
EU leaders had already warned that Italy's budget plans
represented a "significant deviation" from recommended fiscal
policies, raising the prospect of a major clash between Rome and
Brussels over the Italian coalition government's plans.
Prime Minister Giuseppe Conte said the government on Monday
would send its draft budgetary plan to the European Commission,
which could reject the plan and demand changes.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
October 15, 2018 17:09 ET (21:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.