Gov't Meets To Sign Off On Treasury Forecasts Ahead Of 2024 Budget

Reuters reporting that the Italian cabinet meets at 1630CET (1030ET, 1530BST) to sign off on the Treasury's latest economic forecasts. This comes as PM Giorgia Meloni and her team look to put together a budget for 2024 that achieves two aims in both enacting tax cuts promised in her party's 2022 election manifesto while avoiding rattling financial market confidence amid sclerotic growth, a sizeable budget deficit, and recent memories of the windfall tax on banks that resulted in a backlash andeventual alterationsto the legislation.

• Reuters: "This year's growth forecast will be trimmed to around 0.8% from a 1.0% projection made in April, while in 2024 gross domestic product is seen rising 1.0% under an unchanged policy scenario, down from a previous 1.5%, [...] However, the final growth target for next year will be 1.2% or 1.3%, [...] thanks to tax cuts for low and middle-income earners and other expansionary measures Meloni plans to include in the budget bill."
• Reuters: "Meloni's room for manoeuvre has been reduced by costly green building incentives, which were introduced before she took office last year but are still weighing on public accounts."
• Meloni faces a difficult political environment as well as fiscal outlook. Meloni's Brothers of Italy (FdI) party' relations with her coalition allies; the populist League and the centre-right Forza Italia, remain strained. Large-scale immigration across the Mediterranean is also putting pressure on both gov't finances (despite EU aid), public sentiment towards the gov't as a whole, and relations with other EU member states.