Brussels, 29/11/2011 (Agence Europe) - Italian Prime Minister Mario Monti, who is also the country's finance minister, has been attending his first Eurogroup and ECOFIN Council meetings in Brussels on Monday 28 and Tuesday 29 November. On Tuesday, after a meeting with the head of the Eurogroup, Jean-Claude Juncker, he was asked to brief his counterparts on his economic programme to reduce Italy's debt, restore economic growth and win back the confidence of the money markets. On Tuesday evening, EU Commissioner for the Euro Olli Rehn reported back to eurozone finance ministers on his recent trip to Rome to round off an in-depth analysis by his department of the Italian economy (see EUROPE 10503).
Italy is facing an uphill struggle. On Tuesday, the Italian government had to roll over €8 billion of its debt at a new record high. The yield demanded for three-year and ten-year bonds was 7.89% and 7.56% respectively, levels usually described as unaffordable in the medium-term. Ireland and Portugal are gearing up to ask for new international aid because their own long-term borrowing costs are in excess of 7%.
At a mini summit of France, Germany and Italy, Monti renewed the previous Italian government's pledge to restore budget equilibrium in 2013, but in 2012 the Italian economy will be stationary, at best. The European Commission is expecting growth next year of 0.1% or less. The OECD forecasts that the Italian economy will shrink by 0.5% next year. The Italian press says that if a recession does materialise, then Italy will have to introduce harsher austerity measures to the tune of €20bn if it is to balance its books in 2013. The Italian government is said to be considering a freeze on all pension payments in 2012. (MB/transl.fl)