Italy parliament gives final approval to government's 2021 budget

ROME: The Italian Senate on Wednesday passed the government's 2021 budget, giving parliament's final approval to the package which targets the fiscal deficit to fall to 7% of national output from 10.8% this year.

Sidetracked by the coronavirus emergency and tensions in the ruling majority, the government rushed the budget through parliament leaving little opportunity for debate, finally getting it passed just one day before the end-year deadline.

In a final vote of confidence the Senate approved the package with 156 votes in favour and 124 against. It was approved in the Chamber of Deputies last week.

Expansionary measures in the budget total around 40 billion euros ($48.99 billion). They will be financed by 25 billion euros of extra borrowing and 15 billion euros of grants from the European Union's Recovery Fund designed to help nations hardest hit by COVID-19.

The budget assumes that Italy's gross domestic product will rebound by 6% in 2021, following a contraction of 9% this year due to the virus epidemic and the lockdown measures to try to contain it.

With a ban on dismissals due to expire in March, the budget provides more than 5 billion euros to fund furlough schemes in the first half of next year.

It offers 420 million euros to beef up incentives to buy low-emission, electric and hybrid cars, 500 million to support hard-hit airport operators and a raft of other incentives for the purchase of items from furniture to televisions.

The budget also sets aside almost 2 billion euros in the next two years to fund tax breaks designed to spur bank mergers and attract a potential buyer for state-controlled Monte dei Paschi di Siena.

Italy's public debt, proportionally the highest in the euro zone after that of Greece, is targeted to fall next year to 155.6% GDP from 158% in 2020 thanks to the expected return to economic growth. dfsre