Letta Survives Vote as Own Party Questions His Growth Targets

Italian Prime Minister Enrico Letta won a confidence vote in the lower house of Parliament for his new government program, even as his own party’s economic spokesman said the 2 percent growth target for 2015 is optimistic.

The Chamber of Deputies in Rome voted 379-212 to keep supporting the seven-month-old government after Letta presented his priorities for 2014, which include budget rigor, tax cuts and a new election law. Skepticism about his 2015 target, voiced today in an interview with the new economic policy spokesman for Letta’s Democratic Party, shows the diversity of opinion within the premier’s makeshift majority.

“I think it’s very optimistic,” Filippo Taddei, who was appointed to his Democratic Party post on Dec. 9, said of the objective. “We’ll do our best to support him in this effort.”

Backing for Letta, 47, is in question as each of the three parties in his coalition undergoes changes in leadership. The exit of Former Prime Minister Silvio Berlusconi from the alliance last month reduced the governing majority’s seats in the chamber from 453. The election of Matteo Renzi on Dec. 8 to head of the Democratic Party may push members of Letta’s own party to take a more critical stance with the government.

Letta faces a second confidence vote later today in the Senate, where he holds a smaller majority.

Budget Austerity

Italy’s gross domestic product was unchanged in the three months through September after eight quarters of contraction, Italy’s statistics institute said yesterday. Growth of 2 percent was achieved by the euro region’s third-biggest economy just once in the last 12 years. The economy has been in recession four times over that period.

Letta will be siphoning money out of the economy by expanding Italy’s two-year program of budget austerity at the same time as he reduces taxes to promote growth, he said.

“We must continue the contemporaneous reduction of the debt, the deficit, current spending, and taxes on families and on companies, both small and large,” Letta said. “We have to achieve 1 percent growth next year and get to 2 percent in 2015, a level of structural growth accompanied by an attack against unemployment.”

Letta’s target is higher than the government’s forecast made in a Sept. 23 report by the Treasury, for 2015 growth of 1.7 percent. That projection compares with an estimate of 1.2 percent growth by the European Commission.

Ambitious Targets

Taddei, a 37-year-old assistant professor of economics at the School of Advanced International Studies at Johns Hopkins University in Bologna, Italy, will help Renzi set economic objectives for the Democratic Party’s 401 lawmakers. The premier also has to rely on the support from the New Center Right party led by Angelino Alfano, a former ally of ex-Prime Minister Silvio Berlusconi.

Civic Choice, the party previously led by ex-Premier Mario Monti, rounds out Letta’s coalition. Andrea Romano, a Civic Choice lawmaker, pledged his party’s backing today in a speech to parliament, while questioning the 2015 goal.

“I think that you are aware that we’re dealing with ambitious targets,” said Romano. “And you, most of all, must know that from Civic Choice you will have loyal support.”

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE