Italy passes €54bn tax hike and spending cut plan
Italy has passed a €54bn mix of tax increases and spending cuts as the debt crisis threatens the eurozone.
The move is a vote of confidence for prime minster Silvio Berlusconi and passed by a margin of 14 votes.
However, it remains to be seen whether his government can implement the promised reform and if additional austerity measures will be needed to head off the crisis which pushed Italy’s borrowing costs close to unsustainable levels.
The cost of Italy’s borrowings fell back to just over 5.6pc today but is still hovering close to the 6pc that drove European Central Bank intervention.
And it is still unclear whether Italy can balance its budget by 2013.
The austerity measures have already triggered street protests and uncovered deep divisions in Berlusconi’s coalition party.
"Now the key is determination and implementation of the measures," International Monetary Fund Managing Director Christine Lagarde, said in an interview ahead of the vote.
"It's the only way to convince markets and other partner countries of the seriousness of the initiatives taken."
The vote also comes as Greece hovers on the verge of default with only enough money to pay salaries and pensions until next month.