Conte Says His Budget Deficit Offer Is the Best Italy Can Do

(Bloomberg) — Italian Premier Giuseppe Conte insisted after meeting European Union leaders that his government could not improve on its new deficit target offering, as he expressed confidence that an agreement would soon be reached on disputed spending plans.

“These are febrile and intense times for the government,” Conte told reporters after an EU summit in Brussels. “We are responding to the urgent needs of citizens, which also exist in other countries,” he added in a veiled reference to France’s Yellow Vest protests.

Conte said the government would not go below his offer earlier this week of a 2.04 percent budget deficit target for next year, down from a previous 2.4 percent which has been rejected by the European Commission.

“If we were to go below that target, it would mean having to choose between beneficiaries, we will never do that,” Conte said of reforms including welfare benefits and a lower retirement age. “We don’t have other margins” to set a target lower than the new 2.04 percent level, he added.

‘Hat in Hand’

Italy’s negotiations with the EU, also carried out by Finance Minister Giovanni Tria with European Commissioners, aim to ward off the risk of fines for violating EU rules — amid concern from financial markets about the impact of the budget on the country’s debt pile. The Italians are seeking an agreement with the commission by early next week, in time to submit revised spending plans to the Senate in Rome.

German Chancellor Angela Merkel, whom Conte met earlier Friday, was lukewarm towards his efforts. “The commission is the expert for the Italian budget. That’s what counts for me and I told the prime minister so,” Merkel told reporters.

Conte said that “Italy didn’t go hat in hand” to leaders including Merkel and Dutch Premier Mark Rutte on the summit’s sidelines. He said Italy will seek flexibility from the commission to ensure that funds for safeguarding areas at risk of geological instability, and to speed up the judicial process, are not included in the deficit calculation.

The government is working on structural deficit targets, a key demand from the commission, Conte said, but declined go into details. “I am confident we will reach a positive income,” he added.

Asked whether he had a difficult task convincing his euroskeptic deputies Matteo Salvini and Luigi Di Maio to accept the lower deficit given their push for spending on their election promises, Conte replied: “It was not at all difficult to persuade my deputy premiers because from the start we followed a very clear and rational path. We focused on the reforms which were announced in the government program.”

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