The cash-strapped country’s proposals have already been rejected by the EU because it fails to lower massive public debt but the government then refused to make changes to prevent a disciplinary procedure that could eventually lead to fines. Both sides have softened previously hardline rhetoric, reassuring financial markets and leading to a fall in Italy’s borrowing costs. But experts believe the EU will likely push for its fiscal rules to be honoured by Italy to the letter.
Prime Minister Giuseppe Conte said a compromise was in everyone’s interests and was optimistic a deal could be struck with the European Commission.
Mr Conte gave no details but said aspects discussed included ways some budget measures could be strengthened to improve Italy’s faltering economic growth prospects.
He said: “Italy does not stand against Europe. An infringement procedure is not appropriate neither for Italy nor for Europe.
Mr Conte insisted Rome and Brussels are close to “setting out what could be the final solution.”
He said: “We make more progress at every meeting we have.
“We are looking at points that could be the basis for a possible solution.”
La Republica newspaper reported Mr Conte was meeting deputies Matteo Salvini and Luigi Di Maio today discuss a reduction of the 2.4 percent deficit target to somewhere closer to 2.0 percent
And League economic spokesman Claudio Borghi said money set aside for a measure to reduce the retirement age next year may be more than is actually needed and could be used to balance the books after any budget revision.
He said: ”Whether we use these savings to lower the deficit or for other investments is a political decision the government will take with the Commission.”
Senior League politican Alberto Bagnai said the European Commission appeared less hostile to Italy and that rioting in Paris over the weekend is also likely encourage it to seek compromise rather than confrontation.
He said: “If we see the discontent that there is in France, these are things that change the climate.”
European Commission vice president Valdis Dombrovskis said Italy’s budget still needed substantial adjustments but acknowledged the commission was open to dialogue.
The Italian parliament begins voting on the budget this week with Mr Conte expected to tell members it is needed to prevent a chronically sluggish economy from tipping into another recession.