Brussels, 25/11/2011 (Agence Europe) - EU Economic and Monetary Affairs Commissioner Olli Rehn backs the economic programme to be implemented by the new Italian government under technocrat Mario Monti to restore confidence in the markets and boost growth. Speaking in Rome on Friday 25 November after a meeting with Italian Prime Minister Mario Monti, Rehn said that Italy had what was needed and strong economic fundamentals like dynamic private and financial sectors to deal with the enormous challenges facing it at the moment.
Olli Rehn said that the measures planned by the coalition government were the right ones and the strong backing from the parliament would ensure that they were rapidly introduced. He endorsed the economic programme's triptych of spending cuts, structural measures and social fairness, and like an analyst of football matches, he called for Italy to strike a solid defensive “catenaccio” by sorting out its public finance, praising the renewed commitment by the Italian government to return to a balanced budget in 2013. He said the country would have to go all-out and strike proactive, offensive goals in the field of structural reform to provide more, higher quality, jobs for young Italians. The commissioner particularly approved of the changes to the pension system and labour laws, along with relaxing the rules on certain professions, encouraging civil servant mobility and speeding through changes to the civil law system.
Commissioner Rehn said that he would be reporting back to the Eurogroup on Monday 28 November about his talks with the Italian government and the first fact-finding mission by the European Commission, as instructed by the European Council at the end of October (see separate article).
How long can Italy survive with such high long-term borrowing costs? Rehn said that the hike in rates was of concern and the more systemic rise in rates that started in more peripheral eurozone countries was having a negative impact on the financial industry and real economy in Italy. He said that the crisis was forcing the EU to speed up its decisions on boosting the lending capacity of the EFSF bailout fund, pointing out that the European Commission wants the European Stability Mechanism to be introduced in 2012 to act as a sufficiently powerful backstop to prevent any further spread of the sovereign debt crisis. On Friday 25 November, Italy rolled over €6 billion of six-month debt at 6.5 %, sharply up on the 3.5% demanded by the money markets three weeks ago. Two-year bonds were sold at the record high of 7.8%, compared with 4.6% for the previous emission of two-year gilts. (MB/transl.fl)