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Friday 24 March 2023 Dublin: 12°C
AP Photo/Gregorio Borgia Silvio Berlusconi alongside his finance minister Giulio Tremonti in parliament earlier this month.
# Italy
Berlusconi holds emergency meetings over Italian budget crisis
Italian national debt has risen above €1.9 trillion for the first time.

ITALIAN PREMIER Silvio Berlusconi’s government is holding an emergency meeting today to approve new measures to balance the budget by 2013 and calm market concerns over Italy’s public finances.

Rome passed a €70 billion austerity package last month, but the government has said that the financial situation has deteriorated significantly since then. Under intense pressure from the ECB and other international leaders, the government agreed to bring forward its goal of balancing the budget in 2013 instead of 2014 as originally planned.

Retirement, holidays and the ‘cost of politics’

Finance Minister Giulio Tremonti told lawmakers yesterday that possible measures include privatising local services, raising the tax on capital gains, immediately raising the retirement age for women in the private sector, and relegating non-religious holidays to Sundays to increase productivity.

He is seeking to ease Italy’s rigid labour-market laws and reduce the so-called “costs of politics” — the political elite’s generous salaries and perks — not just in Rome but in local governments — which has enraged Italians.

But the government must also try to stimulate Italy’s stagnant economy — it is expected to grow only by about 1 percent this year. And while Italy’s debt is among the highest in the eurozone — at nearly 120 percent of GDP — poor growth is viewed by many as the overriding issue.

Italy’s Central Bank on Friday said public debt topped €1.9 trillion for the first time in June.

The government has been holding feverish talks ahead of the cabinet meeting, scheduled for this evening, in an effort to put the measures into force before the traditional mid-August vacation when much of Italy shuts down. It has also been meeting with business leaders and unions.

Responding to increasing market nervousness, last week members of key lawmaking committees were called back from its summer recess.

Tremonti’s presentation to lawmakers yesterday failed to convince some of his own allies, in a sign of possible rifts within the coalition. The opposition accused Tremonti of being too vague, and insists Berlusconi must resign.

Read: What is ‘short-selling’ – and has it made any difference to the markets? >

Read: Stuck in a rut: French economy records zero growth >

Associated Foreign Press
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