Italy business confidence drops

ROME, Nov 27 (AFP): Consumer and business confidence in Italy dropped in November as the country's populist government tussled with Brussels over its big-spending budget plans.

The business confidence index fell to 101.1 points from 102.5 in October - its fifth monthly drop in a row - while consumer confidence dropped to 114.8 points from 116.5, the national statistics institute said.

On Monday, the populist coalition - the anti-establishment Five Stars Movement (M5S) and far-right League - appeared open to reducing its draft budget deficit, boosting hopes Rome could ease a stand-off with the European Union.

The European Commission has rejected the draft budget because it sharply increases spending and the deficit, which would add to Italy's already massive mountain of debt.

News that the 2019 budget deficit may be limited to 2.2 per cent of gross domestic product (GDP), rather than 2.4 per cent helped boost the markets sharply. Analysts warned however that the devil would be in the detail.

"Forecasting fiscal deficits to a decimal place accurately is impossible given it's impossible to forecast economic growth," said Rabobank senior strategist Michael Every.