Italy's public budget deficit in the first half of 2014 widened to 3.8 per cent of gross domestic product, compared with a deficit of 3.5 per cent in the same period of 2013, official statistics agency ISTAT said yesterday.

The widening of the deficit ramps up pressure on Prime Minister Matteo Renzi to keep Italy's deficit within the European Union limit of 3 per cent of output this year.

ISTAT said spending dropped 0.4 per cent in the first half of 2014 from a year earlier, while revenues declined 1.1 per cent.

Direct tax revenues fell 1.9 per cent year-on-year, while indirect tax revenues rose 0.3 per cent.

Italy has an official target of a 2014 deficit of 3 per cent of GDP, bang on the European Union's ceiling, having posted a deficit of 2.8 per cent in 2013.

In the second quarter, the budget deficit increased to 1.1 per cent of GDP from 0.7 per cent in Q2 2013, ISTAT said.

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