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 Tidal launch: The most pretentious lines from Alicia Keys' valedictory speech
- 2 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 3 Trevor Noah: Jon Stewart's replacement faces online criticism over 'anti-Semitic' tweets
- 4 Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
- 5 Gamers confess the worst things they've done in The Sims
Costa Concordia: Shipment of Mob drugs was hidden aboard cruise liner when it hit rocks off Italian coast, investigators say
Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
University of Cambridge: Remains of 1,300 scholars are found under building
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
Negotiable: Recruitment Genius: This leading supplier of compliance software a...
£24000 - £30000 per annum: Recruitment Genius: The Associate System Engineer r...
Negotiable: Recruitment Genius: An Executive Assistant is required to join a l...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...