ROME (Reuters) – Italy’s coalition leaders have agreed to work together to avert European Union disciplinary action over Rome’s worsening public finances after a late-night meeting with Prime Minister Giuseppe Conte on Monday, the PM’s office said.
FILE PHOTO: Italian Prime Minister Giuseppe Conte looks on as he holds a news conference at Chigi Palace in Rome, Italy, June 3, 2019. REUTERS/Remo Casilli/File Photo
In a statement published overnight, Conte said he and his two deputies – League leader Matteo Salvini and 5-Star Movement head Luigi Di Maio – would meet with Economy Minister Giovanni Tria and his staff to draw up a strategy to avoid an infringement procedure for the country.
He also said they would set up a shared budget package.
Officials from the 28 EU states will meet on June 11-12 and are expected to say an EU disciplinary procedure against Italy over its 2.3 trillion euro (£2.1 trillion) debt is warranted.
“All’s well, it was a good meeting. Our shared goal is to avoid the infringement while safeguarding economic growth, employment, as well as tax cuts,” Salvini said in a statement after the coalition meeting.
“There won’t be any budget correction nor tax increases.”
Rome’s debt has been rising steadily from a pre-crisis low of 104% of domestic output in 2007 and now stands at 1.3 times economic output, second only to Greece’s within the euro zone.
Market concerns have been heightened by the spending plans of the eurosceptic government which took office a year ago.
Emboldened by the League’s strong showing in last month’s European election and local polls across Italy, Salvini has made tax cuts a priority for the government.
Rome is also scrambling to avoid a sales-tax increase worth 23 billion euros from kicking in next year.
On Monday Salvini expressed confidence that Rome would be able to reach an accord with the EU.
PM Conte has threatened to resign if the two coalition leaders fail to reach a compromise to settle the budget tussle with Brussels, removing the threat of financial penalties and ending weeks of bickering.
Tria is due to speak to parliament later on Tuesday about a letter in which the European Commission requests an explanation on the deterioration of the country’s public finances.
Reporting by Giselda Vagnoni; editing by Valentina Za and Kirsten Donovan