Italian premier Giorgia Meloni unveiled a slightly more expansive fiscal outlook for this year, aiming for an extra sliver of economic growth through tax cuts.
(Bloomberg) — Italian premier Giorgia Meloni unveiled a slightly more expansive fiscal outlook for this year, aiming for an extra sliver of economic growth through tax cuts.
The euro zone’s third-biggest economy will expand 1% in 2023 under the budget plan unveiled on Tuesday, 0.1 percentage point more than it would have without the extra measure, according to a Finance Ministry statement.
The result will mean a deficit of 4.5% of gross domestic product instead of the 4.35% that current legislation would achieve.
The extra fiscal space will finance more than €3 billion ($3.3 billion) in tax cuts for lower-income families, and contribute to a general reduction in the tax burden.
“The prudence contained in this document shows responsible ambition,” said Finance Minister Giancarlo Giorgetti. “It is realistic to aim for greater GDP growth in the coming years.”
The plan follows weeks of negotiations and illustrates the salami-slicing trade-offs Meloni’s three-party governing coalition are having to accommodate as leaders try to balance the competing priorities of containing the country’s mammoth debt while also aiding the economy.
The budget’s improved growth outcome for this year will be offset by a less rosy result in 2024. Expansion then is targeted at 1.5%, down from a prior estimate of 1.9%.
Hanging over Italy’s economic prospects are likely delays next year in Italy’s European Union Recovery Fund projects.
The government is working to obtain the third instalment of such cash, and talks are under way with European institutions to revise some of the projects, milestones and targets, the Finance Ministry said in its statement.
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