Brussels, 20/02/2012 (Agence Europe) - Italy does not need any new austerity plan, even if the recession were to continue, Italian Prime Minister Mario Monti assured representatives of the Italian financial world, meeting in the Milan stock exchange on Monday 20 February.
He said that room for manoeuvre had been built in to the €20 billion austerity plan adopted by the Italian Parliament in December of last year (see EUROPE 10518) and that this should allow Italy to return to budgetary balance by 2013. “We have been very careful”, he added: the plan's growth forecasts for the coming years were “very modest” and hypothetical interest rates applied to borrowing “very high”, when these rates have fallen sharply since. The government had also decided that, in the plan, “not a single euro” from tackling tax evasion, efforts which have been significantly stepped up recently, should be included in calculations.
However, while the Italian government is relatively hopeful, expecting a fall in GDP of 0.4% in 2012 (after successive falls of 0.2% then 0.7% in the last two quarters of 2011), the forecasts from the Bank of Italy and the IMF are distinctly more pessimistic for this year, with the former predicting a drop in GDP of between 1.2 and 1.5% and the latter expecting a fall of 2.2%.
Monti laid great stress on the need for growth. “Italy needs growth, but it cannot grow alone. Italy needs Europe to recognise Italy's need for growth”, he said, seeking to draw the attention of his eurozone partners to the danger of having the current tensions that can be observed in Greece, as a result of the austerity plan imposed on it, extending to “a growing number of states where possible disturbance could have serious consequences”. For that reason, Italy, along with 11 other member states, including the United Kingdom, the Scandinavian countries and some Central European states (see related article), has just signed a letter calling for an action plan for growth. Rome does not want to stick solely to policies demanding austerity, as Germany and France are pushing, and intends “to work, too, with countries outside the eurozone which want reform and growth”.
Domestically, Monti said he had decided to push on with reform of the labour market. His government will bring forward a Bill before the end of March. “We will bring it forward, and we hope it will be with the support of the social partners”, he said.
FTT. Monti said once again that Italy was “open” to the introduction of an EU-wide financial transaction tax (FTT). He said, however, that he was against introducing such a tax as a purely national measure as Sarkozy was considering in France. (FG/transl.rt)