Populist Coalition Agrees on 2.4 Percent Deficit: Italy Update

(Bloomberg) -- Italy’s coalition government agreed on a 2019 deficit at 2.4 percent of GDP during a late night cabinet meeting in Rome.

The final hours of negotiations have been tense after the government’s two political heavyweights, League leader Matteo Salvini and Luigi Di Maio of the Five Star Movement, demanded a budget deficit target of 2.4 percent to finance their election pledges while Finance Minister Giovanni Tria tried to keep the shortfall to 2 percent.

Here is the latest news, updated throughout the day.

Salvini, Di Maio agree on deficit at 2.4 percent (9:15 p.m.)

“A deal has been reached by the full government on 2.4%. We are satisfied. It’s the budget for change,” Salvini and Di Maio said in a joint statement.

Salvini says there’s agreement on measures (9:04 p.m.)

Taxes will be lowered to 15 percent for 1 million Italians, 400,000 people will be able to retire and as many jobs will be created, and VAT won’t increase, Salvini said on the sidelines of the government talks. Measures to include investments for schools, streets, and local communities, he said.

Tria resisting pressure from Five Star, League (8:54 p.m.)

The finance minister is pushing back against demands from League and Five Star for a 2.4 percent to 2.5 percent deficit-to-GDP target, Ansa newswire reported.

Government aiming for 2.4-2.5 percent deficit (7:45 p.m.)

A “Reasonable objective” is to reach a deficit-to-GDP target of 2.4 percent to 2.5 percent, according to unnamed Five Star and League officials cited by newswire Ansa.

Heading toward an agreement (6:47 p.m.)

Preliminary talks among ministers held by Premier Giuseppe Conte are heading toward an agreement, according to a League official who declined to be named on a confidential meeting.

The Italian Cabinet is set to meet at 8 p.m. to discuss the targets.

Earlier:

Budget Talks Hit by Last-Minute Spending Demands: Italy Update
Italy’s Populist Government Faces First Big Test of Unity (1)
Italy’s Five Star Seeks Agreement With League on 2.4% Deficit
Italy’s Fiscal Fight: The Long and Winding Road to Budget Day

Coming Up:

• Full details of the fiscal framework will be released on Friday.
• Italy has to submit its draft budget plan to the European Commission by Oct. 15

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