Italy will manage to bring its budget deficit below the limit set by the European Union only in 2026, delaying an earlier objective and risking a confrontation with Brussels.
The right-wing government of Prime Minister Giorgia Meloni postponed by a year pulling the deficit under the EU’s ceiling of 3% of gross domestic product, according to a budget plan approved by the cabinet late Wednesday. The bloc is set to reimpose the limit in January.
The budget plan underscores the challenge Meloni faces in balancing tax-cut promises and souring economic growth. Italy is not the only country struggling to meet EU fiscal rules. France will have a deficit of 4.7% this year and Spain of 4.1%, according to Bloomberg forecasts. Giorgetti blamed interest rate hikes by the European Central Bank, as well as Russia’s invasion of Ukraine, for slower growth. The larger deficit will “allow us to confirm measures for lower-income families and in particular tax cuts on wages, measures to boost births” and significant resources for the public administration, he said.
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