Italy's ruling centre-left -coalition raised income tax for high earners in a 2007 budget that government ministers defended yesterday as necessary to narrow the gap between the wealthy and less well-off.

"We've done a budget in which my first concern was the rights of the weak," Romano Prodi, prime minister, told reporters. "Those who have less are being strongly helped, so thatthe country can develop -better."

The budget contains €33.4bn ($42.3bn, £22.6bn) of revenue-raising measures and spending cuts, of which €14.8bn will go to reducing Italy's budget deficit, as agreed with its European Union partners. The deficit will fall to 2.8 per cent of gross domestic product from 4.8 per cent this year.

Tommaso Padoa-Schioppa, finance minister, told the Financial Times in an interview: "The government will fully realise the task of reducing the deficit to 2.8 per cent of GDP. This is what we agreed with Brussels, and this is what we will do."