Italy puts big squeeze on budget deficit
Saturday 28 September 1996
Romano Prodi, the Prime Minister, emerged from eight hours of cabinet discussion to announce a cut of 63 trillion lire in the 1997 budget, almost double the 32.5 trillion that his predecessor, Lamberto Dini shaved off this year's at considerable political and social cost. The goal is to bring Italy's budget deficit down to 3 per cent of GDP by the end of next year, as stipulated by the Maastricht treaty - a target which until recently few had considered possible until 1999 at the earliest.
Roughly 38 trillion is due to come from a combination of cuts in expenditure and tax rises, another 13 trillion from a one-off "Europe tax" and a further 12 trillion from unspecified treasury operations. It was far from clear, however, how this highly ambitious plan would go down either in parliament or the country at large.
To put his budget together, Mr Prodi has needed the support of a broad swathe of parties from the liberal centre led by Mr Dini to the far-left Rifondazione Comunista, which is not part of the government but whose votes are crucial to give the government a majority in the Chamber of Deputies. On Thursday, the leader of Rifondazione Comunista, Fausto Bertinotti, won a commitment that the new budget would not touch state pensions or increase charges for health care.
That deal caused considerable dismay on the right wing of the government coalition. Diego Masi, the parliamentary floor leader of Mr Dini's party Rinnovo Italiano, said the package was over-reliant on tax increases and tendered his resignation.
Opinion polls show that the one-off Europe tax, in particular, is unpopular with the electorate since Italy already has one of the highest tax thresholds in the EU. Mr Prodi has promised this will be the last austerity budget, but the continuing belt-tightening plays into the hands of fringe political groups including the separatist Northern League, which has made considerable mileage out of the resentment northern voters feel at having to bail out the less affluent south.
- 1 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 2 50 books for students to read this summer: From Ernest Hemingway to Gillian Flynn
- 3 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 4 Students offered grants if they tweet pro-Israeli propaganda
- 5 Joey Barton and Yossi Benayoun become involved in Twitter row over Israel-Gaza conflict
Israel-Gaza conflict: Israeli targeting policy under scrutiny after shellfire hits a mother and child, a school full of refugees and a doctor’s home
Metallica drummer Lars Ulrich claims Noel Gallagher helped him kick his cocaine addiction
Peaches Geldof: Her final day – and her fatal decision
Iraq crisis: Isis orders Mosul shop keepers to cover mannequins
Students offered grants if they tweet pro-Israeli propaganda
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
£40000 - £45000 per annum: Ashdown Group: A well-established software house ba...
£28000 - £33000 per annum: Ashdown Group: Marketing Executive (Digital Marketi...
£400 - £401 per annum + competitive: Progressive Recruitment: SSIS Administrat...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...