November 28, 2018 / 11:49 AM / 18 days ago

Italy needs to cut 2019 budget deficit substantially -Dombrovskis

BRUSSELS, Nov 28 (Reuters) - Italy needs to change substantially its budget deficit plans for next year to avoid EU disciplinary action, European Commission Vice President Valdis Dombrovskis said on Wednesday.

Italy is looking for ways to contain public spending while supporting flagging economic growth in a bid to head off disciplinary action by the Commission, Economy Minister Giovanni Tria said on Wednesday.

But Dombrovskis reiterated that EU finance ministers asked Italy in July to reduce its structural budget deficit, which excludes one off items and business cycle swings, by 0.6 percent of GDP next year.

Italy planned to increase it by 0.8 percent of GDP according to its own forecasts and by 1.2 percent according to the forecasts of the Commission.

“We see the gap is very big. It is clear there needs to be a substantial correction of the fiscal trajectory,” Dombrovskis told a news conference.

“It is necessary that Italy’s government correct its course as regards its fiscal and macroeconomic policy because the current direction seems to be counterproductive,” he said. (Reporting By Jan Strupczewski and Francesco Guarascio; editing by Philip Blenkinsop)

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