ROME

Italy's new government led by Prime Minister Giorgia Meloni unveiled its first budget on Tuesday, approving an economic package aimed at cutting record-high energy costs and slashing taxes for workers.

Meloni said the new economic package was “courageous,” stressing that the additional government spending will help boost the recovery of Italy’s struggling economy, which is expected to contract in the coming quarters.

The budget was approved overnight after a three-hour-long Cabinet meeting. Now it goes to Brussels for approval and then to the Italian parliament, which has to pass it by the end of the year.

The measures are valued at about €35 billion and will be funded for around 60% by raising next year's budget deficit to 4.5% of gross domestic product (GDP).

The package includes extra spending and tax cuts for both payroll workers and self-employed. It also earmarks over €21 billion next year to help firms and families pay rising electricity and gas bills.

The main opposition parties criticized the budget that came in the face of spiking inflation and recession threats, accusing the government of targeting the poorest by cutting a so-called "citizens' income" scheme, which was introduced in 2019.

"There are two big priorities," Meloni said at a press conference presenting the new measures. "Growth, which means safeguarding our production system, and social justice, which means focusing on families and people with lower incomes.”

Meloni also stressed that the new economic package was the outcome of “political choices,” dubbing it “a courageous budget that is coherent with the pledges we made to the Italian people during the election campaign."

On the fiscal side, the package introduces incentives aimed at encouraging firms to hire more women under 36 years old and temporary workers on open-ended contracts.

The budget also reduces the retirement age from next year, so that Italians will be able to draw a pension from the age of 62 if they have paid at least 41 years of contributions.