The new government is hoping the knock-on benefits of Italy's Sunday World Cup soccer victory will extend to its stalled economy.
Economy Minister Tommaso Padoa-Schioppa told reporters on the sidelines of a meeting here of European Union conomy and finance ministers: "I'm convinced the World Cup effect exists and that it is a positive one".
"This will boost Italy's international image, with a favourable impact on exports and confidence, which are at the heart of a revival in consumer spending and investments," he said.
A recent study by Dutch bank ABN Amro predicted that if Italy won the World Cup, its GDP would grow an extra 0.7%. Asked to quantify the impact in terms of GDP, Padoa-Schioppa said that "it's impossible to indicate a figure or make precise calculations".
But the farmers' union Coldiretti echoed the minister's optimism, noting that official statistics showed Italy's last World Cup win in 1982 sent exports soaring 15%. Italy is struggling to emerge from a period of economic stagnancy: over the past five years, GDP growth has averaged less than 0.7% per year.
At the same time, tough measures are required to bring down its burgeoning budget deficit and debt levels.
Italy's deficit has breached the EU's 3% limit for the past three years and is on line for exceeding 4.6% of GDP this year unless action is taken.
The previous, Silvio Berlusconi-led government promised the European Commission that the deficit would be slashed to
2.8% by the end of 2007 and the EC has ruled out an extension on that deadline.
On the debt front, the Bank of Italy announced on Tuesday that it had hit a record level of 1,565.9 billion euros. It said that over the March-April period alone, Italy's debt mountain - the third biggest in the world - rose by 9 billion euros.
The debt began rising last year for the first time in a decade and has been forecast to hit 108.3% of GDP this year. The government is working on a 35-billion-euro budget package for 2007, amounting to 2.5% of GDP, and has already passed an emergency 7-billion-euro supplementary budget for this year.
In other comments on Tuesday, Padoa-Schioppa said he doubted that Italy would be granted an extension on its 2007 deficit deadline. He stressed that the centre-left government's economic planning blueprint (DPEF) approved last week "sees a return back below the 3% limit by the end of 2007". The minister underscored that the EU had shown
"confidence" in the DPEF, which provides the basis for the future budget and contains guidelines and forecasts for the next four years.
The euro group, consisting of finance ministers from the 12 euro-zone countries, gave the document a green light on Monday.
But on the domestic front, leftist allies of Premier Romano Prodi fired renewed warning shots.
The small Italian Communists' Party (PDCI), one of nine parties in Prodi's governing coalition, complained that the DPEF had been drawn up too hastily without the necessary involvement of all alliance forces. "The government is talking about accounts consolidation but this must go hand-in-hand with social justice. Workers and pensioners should not be the ones to pay," the PDCI said.
The Communist Refoundation Party (PRC) has also criticised the DPEF. Welfare Minister and PRC member Paolo Ferrero refused to sign the document last Friday, saying he wanted guarantees that welfare cuts would be avoided. The minister, whose party brought down Prodi's first, 1996-98 government, returned to the attack on Tuesday saying that the measures needed to bring Italy's deficit back below 3% should be spread out over the next two years.
"I'm sure the government will know how to negotiate with Brussels for an extension of the deadline," he said. Prodi's unwieldy coalition stretches from Communists and anti-clericalists to staunch Catholics. Political analysts have predicted he will have a difficult if not impossible task in pushing through any unpopular reforms, particularly in the Senate, where his government hangs by a thread.
Prodi holds two more Senate seats than opposition chief Berlusconi, whom he narrowly defeated in the April general
election and who has vowed to battle the government at every possible turn.
