The high spending budget and plans showcasing Italy’s adamant approach on keeping the budget’s spending as non-negotiable, are finally coming to rest. The nation has reportedly agreed to negotiate with European Union (EU), weeks after publicly announcing to continue on the path set out by its populist government.
Italy vowed to put an end to poverty and thus drafted a high spending budget. However, the European Commission said they should tackle debt and think again. Deputy Prime Minister Luigi Di Mario said on Monday that his government might be willing to reduce the deficit target to end conflict between the two sides.
“If, during the negotiating process, the deficit has to be reduced a bit that’s not a big deal,” Mr. Di Mario said. Italy earlier stated that it had increased its deficit to 2.4 percent in order to carry out the reforms, which as per media could be slashed from 2.4 to 2.2 percent of GDP. Contrarily, as per government sources quoted by the Reuters, the deficit could be slashed to as low as 2 percent.
Italy’s draft budget contains expensive measures to introduce reforms, which includes a guaranteed basic monthly income of about €780 for poor families, and scrapping of extensions related to the retirement age.
A wave of change in Italy’s approach is a result of the meeting between Italian Prime Minister, Giuseppe Conte and European Commission President, Jean-Claude Juncker. However, there is still no clarity on how the economy will continue with their finances post dropping deficit spending. Likewise, nor is it ascertained whether the changes are enough to satisfy the European Commission or not.
Matteo Salvini, the joint deputy PM and leader of the League, already dropped a hint on Sunday, saying “no-one is stuck”, referring to a specific number for the deficit.
Giuseppe Conte in his statement given to Italy’s Ansa news agency said “I do not talk about decimals”, and emphasized over assessing the wider economic impact of the proposed changes.
A major concern with the spending patterns of Italy is that it possesses a huge amount of debt. According to Eurozone rules, the countries should keep their deficit to less than 3% of GDP, which it is trying to do, but also keep national debt to 60 percent of GDP or less.