Well this news from Italy really should come as a shock to no-one:
Italy’s economic record was under scrutiny during the national election campaign on Thursday after forecasts the ruling centre-right coalition would fail to meet its budget deficit-cutting target next year.
The ISAE institute said the deficit would rise to 4.2 per cent of gross domestic product from 3.9 per cent this year, breaching a government promise last July to its European Union partners to reduce the deficit in 2007 to less than 3 per cent.
According to the International Monetary Fund, Italy’s potential annual economic growth rate has slipped to 1.25 per cent. Thursday’s ISAE report forecast growth of 1.3 per cent this year and 1.4 per cent in 2007 after 0.1 per cent last year.
Italy has overshot the EU’s 3 per cent limit on budget deficits every year since 2003, but was in July granted a one-year reprieve – until 2007 – to put its public finances in order.
The government is forecasting a deficit of 3.5 per cent this year and 2.8 per cent in 2007. Last year’s deficit of 4.3 per cent was Italy’s highest since 1996.