Italy's Prodi wins confidence vote on budget

ROME, Nov 19 (Reuters) The Italian government won a confidence vote in the Chamber of Deputies over its belt-tightening 2007 budget, which must be approved by parliament by the end of the year.

The vote was called yesterday by Prime Minister Romano Prodi's centre-left coalition to hasten the budget's passage through the lower house. Three hundred and thirty one votes were cast in favour of the budget, while 231 voted against.

Prodi said the vote was needed to put an end to obstructionist tactics by the centre-right opposition, while the opposition countered that it was called to paper over cracks in Prodi's own 9-party coalition.

''With the vote, an important step has been taken,'' local news agencies quoted Economy Minister Tommaso Padoa-Schioppa as saying.

''We're turning the page.'' If Prodi had lost the vote he would have been forced to resign, but that was never likely as the government has a comfortable majority in the lower house.

Things may be more difficult in the Senate, where Prodi has a built-in majority of just one vote, and often has to rely on the support of non-elected life senators, including former presidents and illustrious public figures, to pass legislation.

The budget, which is due to pass to the Senate next week, aims to cut next year's public deficit by 15 billion euros to 2.8 per cent of gross domestic product, below the European Union's 3 per cent limit for the first time since 2002.

The bill has been modified almost daily since it was presented at end-September, reflecting tensions within the ruling centre-left bloc ranging from moderate Catholics to communists. Both coalitions have tabled thousands of amendments.

The confidence vote was held on a so-called ''maxi-amendment'' put forward by the government which, encompassed many of the budget's key measures.

The budget has been widely criticised by economists for being over-reliant on higher revenues to cut the deficit and failing to make structural cuts to public spending.

REUTERS DKS PM0443