Brussels, 27/10/2011 (Agence Europe) - The eurozone welcomed Italy's structural reform package to boost growth and ensure fiscal consolidation, and urged the Commission to assess the measures and monitor their introduction, explain the eurozone heads of state in their conclusions document after the Wednesday 26 - Thursday 27 October summit in Brussels. Their comments were highlighted by the French Preisident, Nicolas Sarkozy, who said after the talks that from what the President of the Commission, the President of the European Council and the President of the ECB had said, they appear to be satisifed with Italy's promises and now await their introduction. The German Chancellor, Angela Merkel, said that Italy had to make further efforts and the private sector had to become more competitive, in addition to the proposals unveiled by the government to tackle pensions, budget consolidation and reducing the debt to 113% in 2014.
The eurozone heads of state had been expecting Italy to come forward with tangible, quantifiable measures and timings to reduce the public deficit (currently standing at 120% of GDP, more than EUR 1.9 trillion). The measures were fought over tooth-and-nail by the Italian prime minister and his allies in the Northern League, and set out in fourteen-page email to the President of the European Council and the President of the European Commission, Van Rompuy and Barroso respectively. In the four chapters of the document, Berlusconi lists measures the Italian government is planning to introduce over the next three years to reduce debt and stimulate growth.
The Italian Ten-Point Plan
The first chapter covers the Fundamentals of the Italian Economy setting out an overview of public finance since January 2010 and public deficit forecasts from 2011 to 2014, along with expected changes to the debt as a percentage of GDP in 2012. The idea is to achieve a balanced budget in 2013 and a surplus in 2014 onwards. Along with the two austerity plans approved last year, the debt should start falling as a percentage of GDP in 2012 and stand at 112.6% in 2014.
The second chapter sets out Structural Reform for Growth. Measures under consideration include: - Updating the way EU Structural Fund cash is used in Southern Italy in collaboration with the European Commission as part of the 'Eurosud' programme; - Reforms to make the labour market more efficient, allowing redundancy for economic reasons from 2012 onwards; - Opening the market to greater competition by increasing the Italian Competition Authority's powers by March 2012 to remove inconsistencies between promoting competition and local and regional legislation governing shops, professions and local public services; - Updating the civil service, removing red tape and forcing civil servants to become mobile; - Making the legal system more efficient to reduce the time taken to process civil law cases by 20% over three years; - Reducing red tape to encourage investment in infrastructure and construction. To stimulat the building industry, the State will act as guarantor to banks for mortgages for young, married, first home-buying couples; - Constitutional reform ahead of the transcription of the 'Golden Rule' into the Italian constitution next year along with a reduction in the number of parliamentarians and giving the government greater powers (removing provinces).
The third and most important chapter covers Viable Public Finance. The flagship measuresinvolve pension reforms with the age of retirement gradually increasing from from 65 to 67 2013 to 2026. The retirement scheme according to seniority will remain in place under to pressure from the Northern League, which refuses to budge on the issue; - Tax reforms to save €50 bn in three years (€4 bn in 2012, €16 bn in 2013 and €20 bn in 2014). There is a clause whereby if these targets are not achieved in the three years in question, then 'fiscal facilities' will be slashed to achieve the savings; - The publication by 30 November 2011 of a plan to evaluate and sell state assets to raise €5 bn over three years; - The creation of a special committee by the end of the year in cooperation with the regions and national business and financail institutions to draw up a public debt reduction plan.
At a press conferernce after the summit, Berlusconi said that the eurozone had done good workon governance and Greece, and that Italy's package of measures had been well received by the other leaders and implementation of them would be monitored by the European Commission. He said his government would soon be publishing a timetable of legislation to be introduced by the country's Chamber of Deputies and that the introduction of the measures was in the interest of all Italians and he hoped that although they were binding, they would be supported by the opposition. Italy's prime minister reassured journalists when a reporter pointed out that the introduction of austerity measures in Greece had been greeted by violent disorder. Berlusconi said that the measures being considered by the Italian government concerned the civil service and were nowhere near as tough as the Greek measures, not intending to sack civil servants or cut their pay, but only to ensure greater mobility in the civil service (FG avec DD-stag/LC/MD/CG/JK/MB)