Italy forces through compromise budget

Italy forces through compromise budget

Italy’s populist coalition has won final parliamentary approval for its 2019 budget, ahead of a year-end deadline after a prolonged clash with the European Union.

The lower house voted 313 in favour and 70 against the budget, which had already gained senatorial approval ahead of the December 31 deadline. If missed, spending would have reverted to the 2018 budget, creating market instability.

However, high-spending policies, including a basic “citizens’ income” for some of the poorest Italians and a reduction in the retirement age, remain in the spending plans.

The retirement age is due to be lowered from 67 to 62 for millions of Italians who have paid into the pension system for at least 38 years.

The budget debate was halted in both parliamentary chambers, sparking opposition outrage. MPs from Silvio Berlusconi’s right-of-centre Forza Italia party wore vests saying “enough taxes” and other slogans before being forced from the chamber on Saturday.

The centre-left Democratic Party has launched a constitutional court bid to oppose the government’s efforts to force the budget bill through parliament. The ruling coalition claimed time was tight after weeks of negotiations with the European Commission, which helped Rome to avoid fines being imposed.

Italy has proportionally the second highest public debt in the eurozone, after Greece, leading Brussels to take the unprecedented step of asking Rome to redraft the budget.

Italian Prime Minister Giuseppe Conte (pictured) and finance minister Giovanni Tria have seen their reputations enhanced from the budget standoff, after persuading deputy prime ministers Matteo Salvini of the far-right Lega and Luigi Di Maio of the anti-establishment Five-Star Movement to back down on overly generous election pledges.

The budget will still fund the introduction of a basic payment of around €780 a month for those on low incomes, a policy for which Five Star has set aside around €10 billion.

Salvini and Di Maio agreed to lower the 2019 deficit target to 2.04 per cent from an initial 2.4 per cent, as well as to delay and cut investment pledges.

Brussels rejected the original 2.4-per-cent target, saying it broke EU financial rules.

Tria defiantly told the media: “I’m not resigning. It’s absolutely out of the question.

“If I’d wanted to quit, if I’d wanted to give up everything, I’d have done it the evening they announced the deficit at 2.4 per cent. There really was a motive there,” he told La Repubblica newspaper.

Prime Minister of Italy Giuseppe Conte. Picture credit: Kremlin

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.