The Italian draft budget for 2008 will be presented to the Council of Ministers in a few days and, according to Italy's Deputy Minister of the Economy Vincenzo Visco, it will be a balanced budget.
He insists that not all requests can be accommodated - that would raise the country's public deficit to 4 percent, pushing it into decline.
Sources say the second budget of the centre-left government of Prime Minister Romano Prodi
should maintain the rigorous measures adopted in 2006.
In Spain, the healthy economy is seen as permitting Prime Minister Jose Luis Rodriguez Zapatero to cut taxes in the 2008 budget.
But the conservative opposition claims Zapatero is
using the cuts for political reasons, six months ahead of legislative elections. They claim he is giving away the country's budget surplus to assure re-election and continue in government.
The German government remains cautious despite the improved health of public finances. Chancellor Angela Merkel and Finance Minister Peer Steinbrueck reckon on a balance in the country's finances by 2011. That would be the first time since 1969.
Demands for a cut in taxes got short shrift from the government in Berlin. However there is increased investment in education and family welfare.
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