August 10, 2019 / 1:57 PM / 13 days ago

Italy not thinking about leaving euro: Salvini

MILAN (Reuters) - The leader of Italy’s League Matteo Salvini, who this week pulled the plug on his own governing coalition and called for a snap election, said on Saturday leaving the euro was not an option on the table.

FILE PHOTO: Deputy Prime Minister Matteo Salvini of Italy addresses a news conference at Viminale Palace, Rome, July 15 2019. REUTERS/Remo Casilli/File Photo

La Repubblica daily, which is close to the center opposition, said on Saturday that Salvini was preparing to campaign on an anti-Europe ticket and threaten to pull Italy out of the single currency bloc if no budget compromise can be reached with Brussels.

“The idea of leaving Europe, leaving the euro has never been in the pipeline,” Salvini told reporters on the sidelines of a rally near Matera, in southern Italy.

“This is yet another Repubblica fantasy, and I leave it in the pages of Repubblica.”

Salvini’s far-right League on Friday filed a no-confidence motion to bring down the government it forms with the anti-establishment 5-Star Movement, a move that he hopes will lead to a snap election and install him as the nation’s new leader.

A day earlier, Salvini - riding high in opinion polls - had effectively triggered a government crisis by saying the ruling coalition was no longer workable.

With parliament in summer recess, Salvini has summoned all League lawmakers back to Rome on Monday and is pushing for a vote on the motion as early as next week, while opposition parties would prefer to wait until Aug. 19-20.

The decision lies with the heads of political groups in the Senate, who will meet on Monday to set a timetable.

SELL-OFF

Salvini’s shock decision to call time on the 14-month-old government threw the euro zone’s third-largest economy into deeper political uncertainty just as it was due to start 2020 budget preparations, causing a sell-off in Italian bonds and shares.

An election could be held as early as October, when the government is supposed to present the budget to the European Commission and Italy’s parliament.

Salvini has promised 15 billion euros ($16.8 billion) of tax cuts for next year but it remains to be seen how this could be squared with a budget deficit anywhere near 2% of GDP, as agreed with the EU to avert a disciplinary procedure.

Rome also needs to find about 23 billion euros to keep a promise to scrap a rise in sales tax scheduled to kick in from January.

On Friday, Salvini said cutting taxes regardless of EU budget rules would be the goal of a new Italian government led by the League.

“The goal of the next government is to set a 15% tax rate for many Italians. If the European Union lets us do it so much the better, if not we’ll do it anyway,” he said.

On Saturday he used a more conciliatory tone, saying the League would hold a “constructive dialogue” with the EU and persuade Brussels to accept the tax cuts.

5-Star has more parliamentary seats than the League, but Salvini’s party now has twice as much voter support, according to opinion polls.

President Sergio Mattarella is the only person with the power to dissolve parliament and he could try to form a new government from the existing legislature before resorting to an election.

Reporting by Silvia Aloisi; Editing by Janet Lawrence

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