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Paolo Pizzoli, Senior Economist at ING, points out that after days of noises, leaked numbers and what not, the Italian government approved but hasn’t published, the framework for the next budget.

Key Quotes

“This was the first official opportunity for the new Five Star Movement and Northern League’s government to put their actual stance on budgetary policy and attitude towards Brussels.”

“The debate over the last month had already made clear that Italy wouldn’t be in for a massive fiscal splurge. Top officials from both the League and 5SM had accepted the introduction of the three strongholds of the government programme, i.e. the introduction of a flat tax, the loosening of the Fornero pension reform and the introduction of a form of minimum universal income and pension would necessarily follow a piecemeal approach.”

“Still, uncertainty remains as to how challenging the proposal would be for the EU.”

“Inevitably, all eyes were focused on the headline deficit target.”

“Both Matteo Salvini and Luigi Di Maio converged on the idea that more fiscal leeway should be left to implement their electoral promises – and reportedly setting a 2.4% deficit/GDP target for the next three years.”