February 24, 2019 / 10:24 AM / 3 months ago

Italy's government will hold together even after EU vote - PM to paper

MILAN (Reuters) - Italy’s ruling coalition is not unravelling and will hold together even after European parliamentary elections, Prime Minister Giuseppe Conte was cited on Sunday as saying.

FILE PHOTO: Italy's Prime Minister Giuseppe Conte addresses the European Parliament during a debate on the future of Europe in Strasbourg, France, February 12, 2019. REUTERS/Vincent Kessler

On Friday rating agency Fitch said it did not expect the government to last a full term due to ideological differences between the coalition partners, with early elections a possibility from the second half of this year.

“Quite honestly I just don’t see all this political uncertainty,” Conte told daily Corriere della Sera.

Tensions in the coalition are running high with the League and 5-Star allies at odds over a long list of issues, as the economy tips into recession.

Speculation is growing that European parliamentary elections on May 23-26 could upset the balance of power in Italy and prompt one of the partners to call early elections.

Earlier this month the League surged ahead in local elections in central Italy while its 5-Star partner lost ground.

Regional elections are taking place in Sardinia on Sunday.

An economic slowdown could make it hard for Rome to meet its deficit target of 2.04 percent of GDP this year, a hard-won compromise agreed with the EU Commission in December.

But Conte ruled out the imposition of a wealth tax and said there would be no need for any “corrective” budget this year.

“Also because we inserted a precautionary mechanism that envisages a 2 billion euro block on spending in July should public finances prove not to be in line with forecasts.”

Reporting by Stephen Jewkes; Editing by Raissa Kasolowsky

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