Brussels, 05/08/2011 (Agence Europe) - “We want to adopt a comprehensive pact between the government and social players absolutely by September” to achieve stability, growth and social cohesion, said Italy's Prime Minister Silvio Berlusconi after a meeting with employers and unions on Thursday 4 August upon closure of the Milan stock exchange. Italy's “Cavaliere” went on to add that he did not believe the crisis would grow worse and that they should not be alarmed by current “spreads” as, at any rate, these relate to fractions of the public debt, which would comprise a very relative increase in costs compared to total costs. Economy Minister Giulio Tremonti, for his part, spoke of a “working method” that would consist of regular contact with the European Commission, the IMF and the OECD, for consultation on the course of action to be taken and on proposals. He also underlined how important it was to keep the ECB informed, although it cannot be directly included in the process.
The aim of the pact is to reassure the markets, Italian public opinion and social partners, alarmed at the brutality and speed at which the crisis is currently developing. Noting the gravity of the situation, unions and employers called for urgent measures without “red herrings” or diversion. Last week, they put concrete proposals to the government. The plan announced by the Italian prime minister essentially takes up their proposals: - inclusion in the constitution of the “golden rule” for budgetary balance recommended by Tremonti; the rapid adoption of fiscal reform, modernisation of the labour market, acceleration of infrastructure works; privatisation and liberalisation; and a reduction in the “cost of politics”.
The markets, however, do not appear to be reassured by this announcement as Italian 10-year rates still exceeded 6% on 5 August, although one could see a slight easing of the differential between Italian Treasury bonds (BTP) and German Bunds, which fell to 380 points, after having exceed 400 during Thursday. (F.G./transl.jl)