A European Union source said Monday that a court ruling last week overturning pension reforms worth billions of euros could force changes to the Italian budget.
"We are waiting to see how the government will apply the judgment (but) anything that changes the fiscal targets of the financial planning document (of Italy) should be offset," the source told ANSA.
However, it is "still too early" to assess the impact of the Constitutional Court ruling, Labour and Welfare Minister Giuliano Poletti said Monday.
At the same time, a business group said the last week's decision, which overturned an earlier government change to pension payments, could be painfully expensive.
The court said the pensions reforms, introduced in 2011 to gradually save the cash-strapped government about five billion euros, could not stand.
Poletti said that ruling must be reviewed in the context of the impact on the government's budget balance, adding that higher taxes to offset the possible losses were not an option. "This government wants to cut taxes, not raise them," said Poletti.
The government of Premier Matteo Renzi has struggled to keep its books in balance, meet EU budget rules, and still take measures to stimulate an economy that for years has been mired in recession.
The pension measures suspending inflation indexing were unconstitutional, the court ruled Thursday in rejecting article 24 of the 2011 decree.
The needs of pensioners living on a fixed income cannot be "unreasonably sacrificed in the name of financial requirements not shown in detail," ruled the court in a filing made under Judge Silvana Sciarra.
Carlo Sangalli, president of retailers association Confcommercio, urged the Renzi government to "find the resources to cover the pension hole by cutting unproductive public spending".
He said the government must avoid tax hikes, including any increase to the value-added tax which he said would "block any prospect of economic recovery" but making it hard for consumers to spend and stimulate growth.
Susanna Camuso, leader of the CGIL trade union federation, said the government must now eliminate the pension reforms that were introduced under the former premier Mario Monti.
The aim of the 2011 pension measures was to "equalize" high pensions by suspending some inflation indexing so as to save - by some estimates - about 1.8 billion euros in 2012 and three billion euros in 2013.
The measures were to affect only pensions greater than three times the minimum pension provided by national agency INPS.
The plan came during a very low point in the Italian economy which was plagued by recession and very high interest rates.
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