July 16, 2018 / 8:14 AM / a year ago

Italy proposes 50 billion euros of extra spending on investments: Savona

European Affairs Minister Paolo Savona adjusts his glasses as he holds a news conference at the Foreign Press Club in Rome, Italy June 12, 2018 REUTERS/Alessandro Bianchi

ROME (Reuters) - European Affairs Minister Paolo Savona proposed on Monday that Italy should boost investments by about 50 billion euros ($58 billion) and called on the EU to back the plan instead of insisting on deficit reduction.

In an interview with daily La Verita, Savona said Italy should be allowed to spend the equivalent of this year’s estimated current account surplus, around 2.7 percent of gross domestic product, on new investments to raise economic growth.

Savona also called for an increase in the powers of the European Central Bank so that it can be “the lender of last resort” for the eurozone. He said those who did not agree “don’t want a united Europe.”

Savona said if the EU accepts Italy’s proposal to be allowed to spend the 50 billion euros on investments, the boost to growth would generate extra revenues that would allow the government to fund all its main economic reform plans.

He said his proposal had the backing of Prime Minister Giuseppe Conte and the whole government.

Italy’s ruling coalition, made up of the anti-establishment 5-Star Movement and the right-wing League, took office on June 1, promising to slash taxes, increase welfare spending and lower the minimum retirement age.

Savona was the coalition’s original pick as economy minister, but was vetoed by the head of state due to Savona’s critical views on the euro. In a book published this year he called Italy’s entry in the single currency a “historic mistake.”

Savona said the man who replaced him as Economy Minister, Giovanni Tria, agreed with his proposal.

“The issue is the timing of the operation, not the possibility of activating it,” Savona said.

Reporting by Gavin Jones; Editing by Robin Pomeroy

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