The Italian coalition government party members have indicated that are looking for some flexibility from the EU to increase the budget deficit of next year and is on discussing the issue with the investors and European commissioners.
After the decision of Fitch agency to reduce the outlook on the debt rating of Italy, neither Luigi Di Maio nor Matteo Salvini, the primary members of the league as well as a 5-star movement, disown from the promises to lower the taxes and increases the welfare spending.
On Monday, Salvini said, he desired to increase the spending, but under the 3% deficit limit of EU on GDP (gross domestic product). Before this, Di Maio took a stance on the promise made by the 5-star at the time of election campaign to start off a universal income for the poor people.
Di Maio said, “We cannot imagine about hearing to the rating agencies and assure the market, and then show them our back during need.” He added, “Italian will always be our first priority.”
Just sticking to the up[per deficit limit of the EU is not able to satisfy either the investors or Brussels, who wish Italy to took of some of the burdens of debts instead of adding to it.
In 2017, the Commission offered the previous ruling part flexibility on their spending before the elections. But now for the year 2019, the commission wants Italy to reduce its structural deficit.
Italy needs to announce its economic growth and targets related to the budget for 2019 by September 27, 2018.
Along with the matter of universal income, the coalition has shared that it desires to cut-down the tariffs, rollback of pension reform (partly), increase financial investment in the public domains, introducing an automatic VAT increase from next year.
But, as per the recent data, the economy of Italy is gradually reducing this year that further puts pressure on the government for exercising different activities.