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Italy unlikely to set new 2020 deficit goal in EU budget tussle - government source

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ROME (Reuters) – Italy aims to clinch a deal with the European Commission over its contested public finances without setting a new goal for next year’s budget deficit, a senior government source told Reuters.

The government will cut this year’s deficit target to 2.0% or 2.1% of gross domestic product in the next few days, from a 2.4% goal set in April, and hopes this will go a long way to satisfying the Commission, said the source who asked not to be named.

For next year, the coalition of the anti-establishment 5-Star Movement and the right-wing League is reluctant to commit to a new target, but will instead promise to cut public spending and scrap many existing tax breaks, the source said.

The current deficit goal for 2020 stands at 2.1% of GDP.

The EU Commission has said a disciplinary procedure against Rome is justified because it failed to cut its large public debt in 2018 as promised, and the Commission forecasts the debt will also rise this year and next.

(Reporting by Giuseppe Fonte, writing by Gavin Jones)

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