Italy’s Temonti outlines tough new budget measures
Italy has outlined tough new measures in a bid to balance its budget in 2013 as pressure comes on more European countries to rein in their debts.
Finance Minister Giulio Temonti told a joint committee of parliament that the country needs to reduce its deficit to 3.9pc of income this year and 1pc next year.
Measures include raising the retirement age for women in the private sector, cuts to public sector pay and moving non-religious holidays to Sundays to boost productivity.
In recent days, the European Central Bank has been forced to buy-up the debts of Italy and Spain in the secondary market as fears of a euro debt crisis and a worldwide recession gripped investors.
The US Federal Reserve decided this week to keep interest rates at a record low in a bid to boost the economy after Standard & Poor’s cut its AAA credit rating status.
And ratings agencies were forced to back the French economy as rumours abounded that the country could lose its AAA status.
While there are no fears that the French economy will need an Irish-style bailout, the rating could be lost if the European bailout mechanism had to be extended significantly.
The current European Financial Stability Facility (EFSF) stands at €440bn but some economists believe it could have to be raised to over €1 trillion.