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New Italian government budget boosts spending to tackle energy crisis

By Crispian Balmer

ROME (Reuters) – Italy’s new right-wing government plans to announce some 31 billion euros in new Next year’s budget spending on Monday is largely focused on stemming the fallout from high energy prices while delaying some of the most generous election promises.

The ongoing energy crisis triggered by Russia’s invasion of Ukraine means Prime Minister Georgia Meloni and her allies will be unable to deliver on their more extravagant campaign promises, including big tax cuts.

“We will not be able to do everything, all Industry Minister Adolfo Urso told La Stampa newspaper on Sunday.

Meloni has said , will use about two-thirds of the extra spending power. Helping businesses and households survive record gas and electricity bills. This is about invested in 2023 billion euros to deal with soaring energy prices.

Cabinet this month changed 2023 deficit target from predecessor Mario The Draghi government’s forecast of 3.4% was raised to 4.5% of gross domestic product. But ministers said they would be fiscally prudent to avoid the budget mistakes that led to the ouster of former British Prime Minister Liz Truss.

As a result, the far-right League party’s campaign promise of generous reforms to the pension system has been delayed, and while the budget will include tax relief for the workforce, massive income tax cuts have largely been ruled out.

Struggles to help households cope with dizzying inflation hit by EU Harmony index 18.6% YoY Oct , the cabinet is considering scrapping sales tax on core essentials such as milk and bread.

Additional borrowing will pay for some of the spending commitments, but is expected to be passed through a levy on the profits of energy companies that benefit from sky-high oil and gas prices Windfall tax to raise around 3 billion euros in new revenue.

Out of savings, Meloni is also expected to launch a “citizen wage” poverty alleviation program.

Left party says , the measure is crucial given the poor state of the economy, but the Coalition says it enables the unemployed to avoid the job market.

“(Workable age12-75 Payments will be stopped. But this will not happen immediately, Deputy Government Minister Giovanbattista Fazzolari told Corriere della Sera newspaper, 2023 There will be a transition phase.

Once the budget is approved by the Cabinet, Parliament will before it was passed into law.

($1=0.9686 euros)

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