EU document says Italy needs up to 4.8 billion euros in new cuts

BRUSSELS (Reuters) - Italy will need to find extra belt tightening measures worth as much as 4.8 billion euros ($5.9 billion) next year to meet European Union budget targets, according to a technical document prepared for the European Commission. The document, seen by Reuters on the day the Commission issued a statement on euro zone member states' budget plans, said Italy needed to take additional measures equivalent to between 0.2-0.3 percent of its 1.6 trillion euro gross domestic product next year. The Commission did not issue any formal directives to the government in Rome on Friday ahead of a final decision on the budget plans in March, but it said Italy was at risk of breaching the EU's rules on running sound public finances. Italy, heading for a third straight year of economic contraction, has already locked horns with Brussels over its budget plans. It initially proposed to cut its structural budget deficit, adjusted for swings in the business cycle, by just 0.1 percent of GDP before later agreeing to raise the target to 0.3 percent. The Commission document said however that the promised 0.3 percent cuts were based over-optimistic expectations for the revenue to be raised from fighting tax evasion and from gambling tax revenues. It said the real size of the proposed cuts would actually amount to just 0.1 percent of GDP and would therefore need to be stepped up in order to bring the structural deficit into balance as EU rules require. (Reporting by Francesco Guarascio; writing by James Mackenzie)