(Bloomberg) -- Italy’s new Prime Minister Giuseppe Conte, whose populist government has already been buffeted by financial markets, sought to reassure on his fiscal expansion plans with a pledge to gradually reduce the country’s massive debt burden.
Political novice Conte, 53, won the support of lower house lawmakers in a confidence vote Wednesday evening, with 350 votes in favor and 236 against. The law professor won an earlier vote in the Senate on Tuesday, but his speech in the upper house roiled investors concerned at measures including a “citizen’s income” and a two-tiered flat tax that could cost over 100 billion euros ($120 billion) in the first year.
“This government has the audacity to seek new economic policies,” Conte told the lower house where his coalition has a big majority. “This means promoting social and economic growth, respecting the principle of a gradual reduction of debt.”
Italian bonds and stocks dropped earlier on Wednesday as Conte’s government continued to unnerve investors and European Central Bank policy makers flagged the prospect of talks to end its debt-buying program. Italy boasts one of the heaviest debt burdens in the euro area. The spread between the yield on Italian and German 10-year bonds was little changed after Conte’s speech in the lower house.
Conte reiterated that he’d follow the program drawn up by the two coalition partners, the euroskeptic Five Star Movement and the League, confirming plans for a flat tax and targeting the European Union on its handling of immigrants from across the Mediterranean. “It’s pointless asking for more Europe if we’re left alone” to deal with migrant arrivals.
Conte said he’ll seek to review recent legislation on cooperative banks and mentioned a need to distinguish between “banks that provide credit,” based in specific regions, and “banks dedicated more to speculation.”
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