Italy's Prime Minister Romano Prodi will deliver a draft 2007 budget on Friday, with some of the parties in his own centre left coalition threatening revolt. The draft must be finished by the end of the month for parliament to approve it by the year-end. This report from Christian Fraser:

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His proposal to lower the threshold for the top rate of tax has split opinion within his coalition. The centrist parties believe the wealthy middle class electorate has been betrayed. While the left wing insists it's rich Italians who should foot the bill. The opposition, led by former Prime Minister Silvio Berlusconi, has revelled in Mr Prodi's discomfort.

Critics say a framework of spending cuts, outlined in July, for local government, health and pensions is steadily being whittled away. The Vice-President, Emma Marcegaglia, said "there are no cuts - so there is no money for growth, for investments in infrastructure, research and technology." Instead, she said, the budget envisaged "tax hikes that would not help the country's competitiveness".

Christian Fraser, BBC News, Rome

Listen to the words

is facing
has to deal with

premiership
here, being the Prime Minister

to plug a gaping hole in Italy's finances
here, to stop the very bad financial situation in Italy getting worse

a tall order
a requirement that is almost impossible to meet

tax hikes
large increases in taxes

to lower the threshold
to reduce the level at which something starts to happen or have an effect (here, top rate tax starts to be collected)

split opinion
caused different views

foot the bill
make the payments

whittled away
gradually reduced

investments in infrastructure
spending money on basic systems and services

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