Italy’s Populists Agree on Budget for “Abolition of Poverty”

(FASTNEWS|COLOMBO) – Italy’s populist government has come to an agreement over spending as it tries to “end poverty” with its first budget.

The ruling Five Star and League parties said late on Thursday that they had agreed to set the budget deficit at 2.4% of GDP. They will press ahead with a minimum income for the unemployed.

The decision defies Brussels’ demand for Italy to rein in its debt.

It is also a defeat for technocrat economy minister Giovanni Tria, who was pushing for lower spending.

Mr Tria was seeking to limit the budget deficit to below 2% of GDP, to avoid adding to Italy’s €2.3tn ($2.7tn; £2tn) debt.

But his political colleagues wanted to free up more money in order to fulfil election promises, which include a basic income, tax cuts and scrapping planned higher retirement ages.

The overnight news hit Italian borrowing costs early on Friday and there were reports that Italy’s president had urged Mr Tria not to resign. All eyes were on the “spread” – the gap between Italian and German bond yields – which was expected to increase on Friday.