Italy Premier Conte Vows to Keep Pursuing Expansionary Goals

(Bloomberg) -- Italian Prime Minister Giuseppe Conte said the government will keep pursuing its expansionary economic goals and vowed the populist coalition would complete its full five-year term.

“The budget starts with a clearly expansionary signal, and maintains that even after the changes made following the negotiations with Brussels,” Conte told Italian daily La Stampa in an interview published on Monday.

Italy Premier Conte Vows to Keep Pursuing Expansionary Goals

The government initially challenged the European Union with a 2019 deficit target of 2.4 percent that led to a weeks-long standoff. Italy eventually backed down, cut the target to 2.04 percent and curtailed some of its spending programs. The administration also lowered its GDP outlook for 2019 to 1 percent from 1.5 percent.

Conte said the lengthy negotiations with Brussels caused the delays in presenting the final version of the budget package in Parliament, sparking criticism from the opposition that the government was ramming through the legislation at the last minute.

The Senate gave the green light to the spending package shortly before 3 a.m. Sunday and it now goes to the lower house, with final approval expected before the Dec. 31 deadline.


Complex Negotiations

“This year’s timing was imposed by the very complex negotiations with Brussels,” Conte said in the La Stampa interview.

Italy’s standoff with the EU rocked financial markets concerned about the budget’s impact on the nation’s debt pile, the biggest in the euro area in real terms. After long insisting they would not budge, populist leaders Matteo Salvini and Luigi Di Maio cut the cost of their biggest promises -- a lower retirement age and a citizen’s income for the poor.

Wrangling over the budget, which the government says provides much-needed stimulus, has damaged business and consumer sentiment, hurting an economy that could see the country slipping into recession.

Conte, recruited from academic obscurity to mediate between Salvini and Di Maio, raised his profile and popularity as he led talks with EU officials on a budget compromise that averted sanctions.

“I’m armed with a lot of resistance with a precise time horizon: only the next five years,” the premier told La Stampa.

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