Salvini Picks His Guy to Take On Brussels Over Italy’s Budget
Salvini Picks His Guy to Take on Brussels Over Italy’s Budget
(Bloomberg) -- Italian Deputy Prime Minister Matteo Salvini would appoint close aide Giancarlo Giorgetti as finance minister if he becomes premier, a signal he would move swiftly to push through huge tax cuts and public works investments to jump start Italy’s weak economy.
“I want an important and courageous budget with a person the world trusts like Giorgetti,” the League leader said in an interview with Italian daily Corriere della Sera. “This is what I want and what I’m working for.”
Giorgetti, 52, currently cabinet secretary in premier Giuseppe Conte’s embattled government, has been a key adviser to Salvini, leader of the anti-migrant League. Giorgetti frequently urged him to ditch the shaky alliance with the populist Five Star Movement -- something Salvini finally decided to do last week.
Salvini’s trusted lieutenant has repeatedly called for a review of EU treaties and has said Italy could breach the EU 3% deficit limit depending on the aim for which this is done. Salvini increasingly has clashed with Finance Minister Giovanni Tria, who he regards as too cautious to deliver a “fiscal shock” for the euro area’s No. 3 economy.
“The 3% rule is not in the tables of law, it’s in the Maastricht Treaty,” Giorgetti said in May. “These rules were written in a world which has changed a lot.”
Warning Shot
But investors have sent Salvini a warning shot over his economic views and confrontation with European partners. Twice in the last year Italy has narrowly escaped censure by the European Union over its failure to rein in debt, which has risen to over 130% of domestic output and shows no sign of diminishing.
With the nation’s bonds having seen the biggest one-week selloff since the current coalition was formed in May last year, more turmoil is expected and could lead its borrowing costs to return to levels that could rattle global markets.
In the Corriere interview, Salvini vows to review the basic income program sponsored by his coalition partner, the Five Star Movement, but says that a reduction of the retirement age and other social spending measures will remain in place.
Giorgetti, who obtained a business administration degree from Milan’s Bocconi University, has sought to calm foreign investors and the EU, tempering the anti-euro stance adopted by some members of the League.
It remains to be seen whether Salvini will succeed in reaching the goal of becoming prime minister. Italian lawmakers on Tuesday summoned Conte to address the senate on Aug. 20. Salvini is pushing for a quick confidence vote that could lead to a snap ballot, though that decision rests with Italian President Sergio Mattarella, who could decide to seek an alternative coalition.
The latest political crisis comes at a time when the economy has almost ground to a halt, suggesting that Italy’s debt burden will continue to rise. The economy has failed to grow in four out of the last five quarters.
While economists predict it will expand again in the second half of the year, gross domestic product is forecast to increase just 0.1% annually in 2019.
To contact the reporters on this story: Alessandro Speciale in Rome at aspeciale@bloomberg.net;Sonia Sirletti in Milan at ssirletti@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Dan Liefgreen, Ben Sills
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