Italian Consumer Confidence Unexpectedly Dropped in May

Italian consumer confidence unexpectedly dropped this month as unemployment remains near a 20-year high amid the deepening recession.

The confidence index dropped in May to 85.9 from 86.3 in April, Italian statistics office Istat said in Rome today. Economists had forecast an increase to 86.9, according to the median of eight projections in a Bloomberg News survey.

Europe’s fourth-largest economy will contract 1.4 percent this year, Istat forecast earlier this month, with household spending and corporate investments both projected to decline. Prime Minister Enrico Letta’s cabinet agreed last week to suspend the payment of a residential property tax due in June and work with parliament to review it. The Italian premier has also said his government will try to postpone a planned sales tax increase in July.

The government, which is under strong pressure to drag the country out of its downward spiral of recession and job losses, is also planning to cut labor taxes, Finance Minister Fabrizio Saccomanni told reporters yesterday after a meeting with his French counterpart Pierre Moscovici.

“In the short term it’s clear the goal is to complete a reduction of the taxes on labor and companies, financed by a reduction of costs and with a fight against fiscal evasion, which remains a big problem,” he said.

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