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Di Maio says EU election will shake up politics, help Italy

ROME (Reuters) - European parliamentary elections in May will shake up the political landscape and help Italy in its budget battles with Brussels, Deputy Prime Minister Luigi Di Maio said on Sunday.

FILE PHOTO: Italian Deputy PM Luigi Di Maio speaks at the 5-Star Movement party's open-air rally at Circo Massimo in Rome, Italy, October 21, 2018. REUTERS/Max Rossi/File Photo

The European Commission last month rejected Italy’s 2019 budget, saying it flouted a commitment to lower the deficit and did not guarantee a reduction in the debt, the second highest in the euro zone as a proportion of GDP.

Italy’s coalition, comprising the anti-establishment 5-Star-Movement and far-right League, has refused to change the main points of the budget, saying it will boost the economy via tax cuts, a lower retirement age and higher welfare spending.

Di Maio told Corriere della Sera daily he was confident that Rome and Brussels could avoid a collision, predicting that the Commission would take a different approach after May’s elections which might boost anti-austerity parties.

“...citizens will vote in the European elections and will cause a big shake up,” said Di Maio, who is also leader of the 5-Star. “We are ready to discuss things around a table, but they cannot ask us to massacre Italians.”

Di Maio reiterated that the government was willing to sell real estate assets, reduce waste and introduce safeguard clauses to ensure the deficit will not exceed the target of 2.4 percent of output in 2019. But he said: “The main reforms of the budget must remain in place”.

The European Commission is expected to start disciplinary steps against Rome next Wednesday, a procedure which could eventually end in unprecedented fines for Italy.

Separately, the chief of Italy’s richest regional business lobby, criticized the ruling parties for using the budget as a tool to boost their own popularity.

“We are very worried about the decision that have been taken and that are putting (the economy) at risk,” Carlo Bonomi, head of regional industry lobby Assolombarda said in a interview with state-owned television RAI on Sunday.

Italian industrialists reckon the lack of investments as the main problem of the Italian budget drafted by the populist coalition, Bonomi added.

“The clear project is to cash in the electoral dividend rather than boosting the economy,” he said.

The European elections are shaping up to be a battle between centrist, pro-EU parties and nationalist far-right formations that want to stop immigration.

Reporting by Giselda Vagnoni; Editing by Janet Lawrence and David Evans