Italy’s New Coalition Is Already Fighting Over Its Next Budget
Italy’s New Coalition Is Already Fighting Over Its Next Budget
(Bloomberg) -- Leaders of Italy’s ruling coalition meet in Rome Monday to discuss next year’s spending plan after a weekend of posturing and veiled threats about a budget Prime Minister Giuseppe Conte says is all but finalized.
After Conte warned that politicians who aren’t team players could end up “outside the government,” Luigi Di Maio, leader of the Five Star Movement, retorted that without his party, the biggest in parliament, “it would be difficult to have a coalition.”
At issue are budget items that affect the constituencies of the two main parties in the coalition, Five Star and the center-left Democrats, or PD. While Conte and Finance Minster Roberto Gualtieri are both holding firm on their position that only minor adjustments can be made, politicians including Di Maio are calling for significant changes. The budget must be approved by parliament by the end of the year.
Italian bonds extended declines. Yields on benchmark 10-year debt climbed seven basis points, touching 1% for the first time since Sept. 12. The spread to comparable German debt widened three basis points to 133 points.
Conte launched his new government in September with the hope of moving beyond the backstabbing and vitriol that was a constant in his previous populist-backed administration. Complicating his task, he now has to juggle the interests of a new party in the coalition after ex-premier Matteo Renzi broke off and formed a group from PD dissidents.
Five Star will bring several “non-negotiable” positions to the Monday meeting, Di Maio said over the weekend, in comments cited by Ansa news agency. Those include jail terms for major tax evaders and an end to commissions charged to vendors for using electronic-payment terminals.
Conte’s administration has promised a moderately expansionary budget that would see the country’s structural deficit -- which strips out one-time measures -- widen slightly in 2020 before narrowing in coming years. That would require flexibility from the European Commission, which must sign off on the plan.
The program partly hinges on improved tax collection. Italy has notoriously high levels of tax evasion, and past governments have tried -- mostly unsuccessfully -- to rein in the underground economy in a bid to boost revenue.
--With assistance from James Hirai.
To contact the reporter on this story: Jerrold Colten in Milan at jcolten@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Iain Rogers, Alessandro Speciale
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