Italian league leader faces friendly shot against budget

ROME / PADUA (Reuters) – Italy's deputy prime minister, Matteo Salvini, is generally in love with the clashes, but now the populist executioner is under attack from a place he calls home.

PHOTO FILE: The leader of the right wing party of the League and Italian Minister of the Interior, Matteo Salvini, arrives for a demonstration in Rome, Italy, on December 8, 2018. REUTERS / Alessandro Bianchi

Dissent grew in the political center of his party, the industrial north, increasing pressure on Salvini and his coalition partner to overthrow their 2019 budget.

"I've always thought that the league was able to help people who were working – real people – and that's why I trusted them at that historic moment," said Lt. Patrizio Dei Tos, who had high hopes when the League took power six months later. since.

Now, he and the other northern entrepreneurs are not so sure.

Since the League and the 5 – star anti – establishment party have formed a government, the economy has reversed and the budget plans providing for significant spending by the new administration have raised the rates for the government. interest and fears a new banking crisis.

In the regions of Lombardy and Veneto, which together account for a third of the national economy and are managed by the League's administrations, small and medium-sized enterprises have begun to openly question the strategy of the party's leader, Salvini.

"We are focusing on managing the country based on emotions rather than numbers," said Dei Tos, whose wood flooring company, Gruppo Labor Legno, achieves an annual sales turnover of over 30,000. approximately 40 million euros (45 million USD).

"We must be careful not to push our luck."

Salvini, who is also minister of the interior, is gaining popularity nationally as a result of his crackdown on immigration, but his core group of family entrepreneurs, ranging from independents to wealthy industrialists, fear that the economy will is already in a recession and government spending plans are making things worse.

Salvini stretches the league mark, wins new voters but moves away from his Nordic base. It is essentially in place at the moment and the league is only willing to slightly reduce the 2019 budget deficit target, which is 2.4 percent of GDP, said sources close to the parties.

But dissent at the heart of the League adds to the intense pressure exerted on him to give ground on the budget in a clash that, according to the European Commission and investors, could undermine the euro area.

The deficit target, which is three times the amount indicated by the previous administration, was rejected by the Commission because it violated EU rules requiring Rome to gradually reduce the burden of its public debt.

Italian bond yields are almost 3 percentage points higher than German safe haven bonds, double the gap that prevailed before the government was sworn in. This has prompted lenders to raise their interest rates and fear financial instability, as banks are big government bonds.

The Milan stock index has fallen by one-fifth since mid-May. Growth fell 0.1% in the third quarter, with some economists predicting another contraction in the fourth quarter as consumption and investment weaken. Last month, consumer and business confidence hit a two-year low.

Feel abandoned

Alberto Bombassei, co-founder and president of the Brembo-based automotive parts manufacturer based in Lombardy, notes that his company has lost nearly a quarter of its value since the new government was put in place.

"For many, the problem is a 5-star, but even our good guy Salvini agreed on measures that he should not have agreed on. Both have abandoned the business world, "said Bombassei, whose company employs more than 3,000 in Italy.

Vincenzo Boccia, head of the largest Italian lobby group, Confindustria, once had high hopes for the league, declaring at a meeting of industrialists in Vicenza, in the north of the country, in September: "The League is close to the working class and entrepreneurs. We have very high expectations. "

Now, he expresses his deep disappointment with the way the coalition is managing the second biggest maker in the euro zone.

"The budget contributes very little to growth and Italy could sink into recession. A significant number of our members voted for the League, but 100% of those I met were against this budget plan, "Boccia said in a television interview.

Confindustria wants Rome to boost investment in infrastructure and says the budget is instead concentrating spending on social protection measures: a pledge by the league to ease pension rules and a five-star commitment to boost social security. introduce a kind of universal income to fight against poverty.

On Monday, Confindustria joined with other employer groups representing 65 percent of GDP to ask the government to change course and boost investment.

League politicians deny having been pressured by their supporters to change course on the budget, saying the discontent is directed against the 5-star rather than the Salvini.

"I am to stay in power with the 5 stars until the European parliamentary elections in May," said Roberto Rolle, councilor in Padua whose party is allied with the League.

"Then we will count our strengths and decide to move forward together. Without the 5 stars, the government will do a lot better. "

The combined approval ratings of the coalition are up. A recent survey shows that the league and the 5 stars have a support of 57.5%, against 50.1% in the March elections. The League alone receives 32% approval, almost double its vote in March.

"This government is loved by people and polls say that approvals are stellar," said legislator Gianluca Paolini, a 23-year-old veteran of the 23-year-old Central Football League in the Central Marche region.

Fans held a mass rally Saturday in Rome to support the League, with Salvini in a defiant form.

"If you question our right and our duty to restore dignity, pride, security, pensions and work for millions of Italians, then I tell you we will not come back," Salvini told the crowd.

The political experts believe that the anger of small entrepreneurs will have an impact on Salvini, but that it will be limited because it has broadened the party's appeal beyond its business-driven base, which in any case little choice.

"The league can not ignore entrepreneurs because they represent his riding. If they are not satisfied, the league must take note and give answers, "said Giovanni Orsina, political expert at the LUISS University of Rome.

But he said his real problems were the turmoil in the markets and the economic slide that triggered the backlash.

Some businessmen believe that the economic mood will eventually bring the results of the polls back to the land.

"Ordinary people are not aware of economic trends until late," said Gianluca Pavanello, managing director of the Bologna-based Macron technical sportswear company.

Additional report by Massimo Gaia in Milan; Edited by Mark Bendeich and Giles Elgood

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