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Italy needs 50 billion euro budget for 'shock' stimulus: Salvini

FILE PHOTO - Italian Deputy PM Matteo Salvini gestures as he holds a news conference in southern Italy on a bank holiday as the government crisis continues, in Castel Volturno, Italy August 15, 2019. REUTERS/Ciro de Luca

ROME (Reuters) - The leader of Italy’s far-right League party, Matteo Salvini, said on Tuesday that a budget worth 50 billion euros ($55 billion) will be needed for 2020 to bring about a “shock” fiscal stimulus.

Salvini pulled the plug on the League’s coalition government with the anti-establishment 5-Star Movement earlier this month, starting a potential countdown to elections which could complicate the nation’s preparations for the 2020 budget.

Italy, which has the biggest debt in proportion to its output in the eurozone after Greece, has promised the European Commission to raise 23 billion euros by hiking sales taxes from Jan. 1 in order to comply with EU deficit rules.

Salvini, who serves as deputy prime minister and interior minister, said that not only must Italy avoid the programmed tax increase but it needed significant tax cuts.

“We face a 50 billion euro budget. It is not enough for me that we do not hike sales taxes. We must start to cut taxes,” Salvini told Radio 24.

“Are we ready to bring about this fiscal stimulus shock? We need a government able to do things, not a government that simply gets by.”

Salvini’s comments come a few hours before Prime Minister Giuseppe Conte was due to address parliament over the ongoing political crisis.

Conte, who is an academic close to the 5-Star, is expected to hand in his resignation to President Sergio Mattarella later in the day.

Asked whether he might change his mind and reconcile with his government partner, Salvini said he wanted to listen to Conte’s speech “before saying yes or no”.

Reporting by Giselda Vagnoni; Editing by Crispian Balmer