A budget deficit of around 10 percent of national output in 2020 targeted by Italy with the gap will remain above 3 percent in 2021. To soften the economic impact of the coronavirus crisis, the country readies a new stimulus package.
The limit for EU countries, until the outbreak, was 3 percent of GDP under the bloc’s budget rules. To allow the EU members to spend more to fight the pandemic, this threshold has been suspended.
For a new spending package that will increase the deficit by 55 billion euros ($59.5 billion), the source said the government would seek authorisation next week from parliament. The deficit will drive to about 10 percent of GDP or slightly above.
Italy began the year with a 2020 deficit target of 2.2 percent of GDP after registering 1.6 percent in 2019, its lowest in 12 years. The nationwide lockdown to fight the epidemic has pushed the country into its worst recession since the World War II, with an expected GDP decline of around 8 percent this year.
To supplement the income of the self-employed and workers temporarily laid off, the country plans to boost funds in its forthcoming stimulus package.
