By Barry Moody
ROME (Reuters) - Confusion, insults and political divisions on Thursday dogged Italy's austerity budget, intended to eliminate a deficit by 2014 and prevent the country being sucked into the euro zone debt crisis.
There was so much uncertainty over the size of a three-year programme of belt-tightening measures announced on Wednesday that a string of different figures published by Italian newspapers on Thursday diverged by up to 28 billion euros (25.10 billion pounds).
To add to the controversy, which had already split the governing centre-right coalition, La Repubblica newspaper ran a video on its website in which Economy Minister Giulio Tremonti could be heard describing his Public Works counterpart Renato Brunetta as a "cretin" during a budget news conference on Wednesday.
The continuing disarray is unlikely to impress markets, which are re-focussing on Italy's high debt, or ratings agencies Standard and Poor's and Moody's who have both lowered Italy's outlook to negative over the past month.
The Treasury was obliged on Wednesday night to issue a statement following Tremonti's news conference clarifying that the budget savings were worth 40 billion euros, but that was too late to prevent figures as high as 68 billion appearing in the press on Thursday morning.
The confusion stemmed in part from the way Tremonti presented the numbers, where it was not initially clear that he was talking of cumulative figures over three years rather than separate amounts that some journalists added together.
Tremonti acknowledged to journalists that there could be confusion. "If you add the numbers up, you can get a larger number ... but this is wrong. I learned this myself," he told Wednesday's news conference.
President Giorgio Napolitano signed the budget on Wednesday and it must be approved by parliament within 60 days. But confusion about the details of the package followed weeks of uncertainty.
If European leaders are unable to contain a debt crisis that has already forced Greece, Ireland and Portugal to take bailouts, Italy is seen as the next "domino" after Spain.
It is vulnerable because it has one of the world's highest public debts at around 120 percent of gross domestic product and has endured more than a decade of stagnant growth.
Markets had been less concerned about Italy because it has kept its budget deficit in check better than most countries in the euro zone and has low private debt. But, reflecting concerns over possible contagion from the crisis, Italian government bond yields soared on Thursday with 10-year bond yields approaching 5.2 percent -- their highest level since 2008.
Tremonti said on Thursday that it would be a "disaster" if Italy did not balance its budget by 2014 as envisaged under the three-year plan.
TREASURY CLARIFICATION
In the video on La Repubblica's website, Tremonti is picked up by a microphone saying behind his hand to an official next to him that Brunetta, who was addressing the news conference, "really is a cretin."
La Repubblica said Tremonti also directed other insults at Brunetta but these are difficult to hear on the video.
Confusion over the final budget figures followed different draft versions of the plan that circulated for weeks with some measures being withdrawn and others added.
Prime Minister Silvio Berlusconi on Tuesday was forced to withdraw a measure slipped into the budget apparently without the knowledge of most ministers that would have directly benefited his Fininvest financial holding company.
The measure caused outrage in the media and the political opposition and protests from Berlusconi's coalition allies the Northern League, who are vital for the government's survival.
At the same news conference on Wednesday, Roberto Calderoli, a senior League minister, said openly that he had not been informed about the measure and had felt "some perplexity" about whether it was in accordance with the constitution.
Berlusconi's attempt to slip a personal measure into the budget increased tensions with the pro-devolution Northern League which already sharply opposes some government policies including Italy's participation in the NATO operation in Libya.
The League is trying to distance itself from Berlusconi, who has been badly weakened by recent humiliating defeats in local elections and four referendums and is under pressure from a lurid sex scandal and three corruption trials.
(Editing by Susan Fenton)
