June 25, 2014 / 3:25 PM / 3 years ago

Italy cuts 2014 austerity goal by a third -spending commissioner

ROME, June 25 (Reuters) - Italy has reduced its target for this year's spending cuts by a third, the commissioner in charge of the government's spending review said on Wednesday, as Prime Minister Matteo Renzi seeks more budget flexibility from the European Union.

Renzi's government pencilled in cuts of 4.5 billion euros ($6 billion) for 2014 to help fund a cut in income tax for low earners and meet its target of reducing the budget deficit to 2.6 percent of national output from 3 percent in 2013.

However, Carlo Cottarelli told the Chamber of Deputies that 3.1 billion euros of cuts already identified to fund the income tax reduction would be the only intervention for this year.

"As far as I know it seems there will be no need for further cuts," said Cottarelli, a former International Monetary Fund official recruited by former Prime Minister Enrico Letta to try to rein in Italy's bloated public spending.

Cottarelli has been given the tough target of identifying cuts worth a total of 32 billion euros by the end of 2016.

As Italy takes on the rotating 6-month presidency of the EU from July, Renzi is trying to negotiate budget flexibility from the EU so he can reduce the deficit more gradually than planned and increase public investments to help a stagnant economy. (Reporting by Giuseppe Fonte; Writing by Gavin Jones; Editing by Louise Ireland)

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