Italian industrial employers association Confindustria said Monday that the government 2007 budget risks reducing GDP growth next year by as much as 0.3 percent.

According to local media reports that Confindustria's studies center predicted that GDP should rise next year by 1.4 percent but "this could be even lower due to the restrictive effect the budget will have on spending and investments."

The report said the growth should be more in line with the rest of the euro zone in 2008.

Confindustria Vice President Andrea Pininfarina said that after zero growth last year, the Italian economy is back on the rise, "However, there is no cause for celebration because our growth rate is much lower than that of our European partners."

The Confindustria has calculated that GDP will rise by 1.8 percent this year, in large part thanks to an upsurge in exports.

In its report, the Confindustria said industrial output in the first 10 months of the year has been 2 percent higher than the same period in 2005.

Employment has climbed by 1 percent this year but will expand by only 0.5 percent in 2007.

Inflation was reported to be 2.1 percent this year and should then decline to an average 1.9 percent over the next two years.