ROME, April 24 (Reuters) - Italy needs budget leeway to help households and firms cope with surging energy costs, Deputy Prime Minister Matteo Salvini said on Friday, signalling Rome is likely to drop
Italy May Lift Deficit Above 3% to Address Ongoing Energy Crisis
Italy's Budget Strategy Amid Energy and Economic Challenges
ROME, April 24 (Reuters) - Italy needs budget leeway to help households and firms cope with surging energy costs, Deputy Prime Minister Matteo Salvini said on Friday, signalling Rome is likely to drop plans to bring the country's deficit below 3% of gross domestic product this year.
Deficit Targets and EU Regulations
Italy pledged this week to reduce its budget deficit to 2.9% of GDP in 2026, just inside the EU's 3% ceiling, despite a darkening economic outlook due to the impact of the U.S.-Israeli conflict with Iran.
Potential Renegotiation with the EU
However, both Prime Minister Giorgia Meloni and Economy Minister Giancarlo Giorgetti said the government could renegotiate the deficit goal with European Union authorities at a later stage to respond to the energy crisis.
Government's Stance on Extra Borrowing
In a further sign that Rome will soon review its budget plan and maintain the deficit above 3%, Salvini said he was in favour of extra borrowing worth "several billions of euros."
"Either Europe lets us help (families and businesses), or we'll help them regardless of what Europe says," he told reporters in Rome.
Salvini leads the far-right League party, of which Giorgetti is also a member.
EU Flexibility and Italy's Response
The European Union is allowing countries to exceed the bloc's deficit limits either to increase their defence spending, or in the case of exceptionally averse economic circumstances.
National Escape Clause and Energy Crisis
Giorgetti said this week that the government may tap this so-called "national escape clause." Italy's budget plan suggests it is more likely to do so to tackle the energy crisis than to hike defence spending.
Measures Taken and Public Response
In response to the turmoil in the Middle East Italy has spent around 1 billion euros ($1.17 billion) to cut excise duties on fuels until May 1, but prices to consumers have changed little.
Industry lobbies and trade unions are pushing for more effective steps, and truck drivers have said they will strike next month.
"If the truck drivers go on strike, the country grinds to a halt, the shops run out of stock, and I can't let that happen," Salvini said.
($1 = 0.8554 euros)
(Reporting by Giuseppe Fonte, editing by Gavin Jones)
