Italy coalition in agreement on budget figures

By Steve Scherer

ROME (Reuters) - Italy's coalition government has agreed on the "numbers and contents" of the budget it will propose to Brussels in a bid to avoid disciplinary action over its plans to hike deficit spending next year, a League party spokeswoman said on Monday.

The European Commission rejected the Italian budget in October, estimating it would not lower the country's huge debt and declaring it in blatant breach of EU fiscal rules. Rome submitted the revised plan last week with a lower deficit.

But a final deal with Brussels had yet to be reached, and the government sat down on Sunday evening to a marathon meeting to hammer out the details of a possible compromise.

"We have found an agreement on further fiscal reductions that probably will be appreciated by the EU," League party leader Matteo Salvini said after the meeting, Ansa news agency reported.

Time is running out to finalise the 2019 budget law, which must be passed by the end of the year. The government summit ended after more than four hours and few details were given.

Salvini, 5-Star Movement chief Luigi Di Maio and Prime Minister Giuseppe Conte have insisted any deal with the European executive not interfere with their flagship reforms - income support for the poor and a lower retirement age.

"(There is) total agreement between Conte, Salvini and Di Maio on the numbers and contents of the proposal to send to Brussels," Salvini's spokeswoman said in a statement as the government meeting neared an end.

The spokeswoman denied tensions within the government and a media report that Conte had threatened to resign.

Also included in the budget are measures to raise taxes on luxury cars in order to provide incentives for electric and hybrid models, the spokeswoman added.

An earlier version of the measure in the draft budget had put Salvini and Di Maio at odds over plans to raise taxes on a wider range of fuel-powered cars.

On Sunday, both Di Maio and Salvini had expressed confidence they could diffuse the conflict with Brussels.

The talks with the commission "will allow us to avoid an infraction procedure," Di Maio said.

(Reporting by Steve Scherer; Editing by Daniel Wallis and Peter Cooney)