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Italy PM spokesman threatens vendetta if Treasury fails to find funds for welfare reform

MILAN (Reuters) - Italy’s prime ministerial spokesman has warned that the anti-establishment 5-Star Movement in the coalition government will sack Treasury officials in a “mega-vendetta” unless they find the resources needed for welfare spending.

Spokesman Rocco Casalino’s comments in a leaked audio clip posted on La Repubblica’s website that then went viral on Youtube come as Italy’s populist coalition government draws up its first budget amid rising tension over how it will fund its proposed measures.

“If in the end they tell us ‘Ah, we couldn’t find the money’ then we’ll devote the whole of 2019 to getting rid of all these pieces of shit at the (Treasury),” Casalino says in the recording, asking to be quoted as a parliamentary source.

“A mega-vendetta is ready,” said Casalino, who also still serves as a spokesman for 5-Star itself.

The government has said repeatedly that it will seek leeway from the European Union to increase its deficit in 2019 so it can spend more on measures aimed at boosting economic growth.

In comments texted to news agencies later on Saturday, Casalino said the publication of what had been a totally private conversation with two journalists represented a violation of privacy.

While acknowledging that the comments were colorful, Casalino said there was no intention to follow them through in practice, adding that they represented instead “a sensitivity inside the 5-Star Movement that it was my duty to present”.

Prime Minister Giuseppe Conte said separately that Casalino’s remarks had cleared up the situation over the audio, and he reiterated his full confidence in his spokesman.

“I take this opportunity to confirm the government is fully at one and united in drawing up the budget,” Conte added.

On Friday, the premier met senior ministers to try to resolve the impasse over the budget between the ruling parties and Economy Minister Giovanni Tria, an academic who does not belong to either of the ruling parties and is resisting their plans to boost spending.

The fiscal plan is to include a series of expenditure commitments including a minimum income for the poor, which 5-Star has been championing.

Financial markets have been unnerved by the debate, with Italian bond yields moving in step with the tone of daily comments from the ruling parties, which took power in June. Italy’s public debt, equivalent to about 131 percent of economic output, is the highest in the EU after that of Greece.

In the clip, Casalino said Tria was not the problem, instead blaming resistance from long-serving and influential officials at the Treasury.

A Treasury source said earmarking resources to particular budget items was a political choice and was not up to Treasury officials. “Decisions on the choice of solutions are up to the politicians,” the source said.

The leader of the opposition Democratic Party, Maurizio Martina, said the spokesman’s words were unheard of. “If Conte has the minimum of institutional sense, he will remove him immediately,” he said in a tweet.

Earlier on Saturday, the head of the Bank of Italy said any increase in deficit spending that did not boost structural economic growth could put Italy’s debt on an unsustainable course.

Reporting by Stephen Jewkes; Additional reporting by Giuseppe Fonte and Giulio Piovaccari; Editing by Helen Popper and Hugh Lawson