Lurking within Matteo Renzi's plan to cut Italian taxes and pay state suppliers are dangers the largesse will hamper efforts to trim the 2.09 trillion-euro (US$2.9 trillion) public debt.

Italy's newly installed prime minister won applause from labor unions with his March 12 blueprint to trim 10 billion euros from lower-income workers' tax bills and a sigh of relief from commercial businesses promised 68 billion euros in arrears payments from the government.

Yet investors and economists say the shifts can't be offset by this year's budget cuts, with gross domestic product projected to grow less than 1 percent. Even though borrowing costs dropped to record lows this year, the tax and spending measures could pare Italy's prized primary budget surplus and jeopardize a recovery after more than two years of recession.

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