Italy to boost deficit to help car industry and furloughed workers, source says

Italy is preparing a 20 billion euro ($22.73 billion) stimulus package that will provide more funds to assist the automotive sector, local municipalities and workers who were temporarily laid off, a government source told Reuters.

The extra spending will involve additional borrowing and drive Italy’s budget deficit to about 11.6 percent of national output from the 10.4 percent indicated in April.

The government began the year with a deficit target of 2.2 percent of GDP after the 1.6 percent recorded in 2019, which was the lowest in 12 years, but the coronavirus crisis has pushed the euro zone’s third-largest economy into a deep recession, making the old deficit targets redundant.