(Bloomberg) — Giorgia Meloni’s government will devote about €30 billion ($31 billion) for extra spending in her first budget law as Italian prime minister, according to people familiar with the matter.
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The package set to be approved by the cabinet early next week will fund further measures to protect businesses and families from higher energy prices, said the people who asked not to be identified because the draft is still provisional. A further €5 billion in European Union support may be added to the total, they said.
The budget is the first test of Meloni’s pledges to continue on the path of fiscal responsibility and debt reduction set by her predecessor Mario Draghi. After approval, the draft faces lengthy parliamentary scrutiny that can still drastically alter its content. Final approval is due by Dec. 31.
The budget by Meloni’s coalition will also include tax cuts for companies, in particular a reduction of the tax burden on labor, the people said. The government will renew fiscal aid for companies in energy-intensive sectors, and tax breaks allowing lower fuel prices at the pump.
Another of its measures will be tweaks to pension rules allowing people with 41 years of service to retire if they are at least 62 years old — a key electoral promise of Matteo Salvini’s League, whose support is crucial for Meloni’s majority.
While Italy’s economic output grew 0.5% in the third quarter, a contraction is expected in the final three months of the year, Finance Minister Giancarlo Giorgetti told lawmakers in Rome earlier this month.
That will make it harder to keep funding energy decrees promised to Italians, and may spark tensions within the governing coalition. So far, Italy has spent about €75 billion on coping with the energy crisis.
Italy is currently targeting 2022 deficit-to-gross domestic product at 5.6% of output. It plans to progressively cut the deficit in coming years from 4.5% in 2023 to 3% in 2025.
That range is less ambitious than previous targets, but still shows a determination to hit the 3% limit normally enforced by the European Union, though currently suspended.
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