Italy wins approval for austerity package

Lower house of parliament affirms a $43bn package of cuts and reforms in a vote called by Prime Minister Mario Monti.

The previous government of Silvio Berlusconi thrust Italy to the centre of the eurozone debt crisis  [Reuters]

Italy’s lower house of parliament formally approved Prime Minister Mario Monti’s tough austerity package after he won
a vote of confidence on the measures aimed at saving the eurozone’s third-largest economy from financial disaster.

On Friday, the Chamber of Deputies, or lower house, approved the 33-bn euro ($43bn) package, which affects everything from pensions to home ownership taxes, by 495 votes to 88.

The plan is set to go to a vote in the upper house next week and be adopted just before Christmas despite strong opposition from some sectors.

Contested by Italy’s unions and the opposition Northern League, the plan has been in effect since Monti’s government
approved it on December 4. But it needed full parliamentary approval within 60 days to remain in force.

Monti, a former European commissioner, called Friday’s vote to speed the package through parliament and avoid debate on dozens of amendments, mostly tabled by the League which has tried to obstruct the measures.

The package, which has been hailed by Italy’s European partners, will cut costs, raise taxes and reform pensions in a
bid to restore market confidence in Italy’s finances and balance its budget by 2013.

Had it been defeated, Monti and his government of technocrats would have been forced to resign exactly a month after the economist was sworn in with the task of keeping Italy from being the next victim of Europe’s debt crisis.

Centre of eurozone crisis

The collapse of investors’ confidence during the summer under the previous government of Silvio Berlusconi thrust Italy
to the centre of the eurozone debt crisis and pushed its borrowing costs to untenable levels on bond markets.

While Monti has seen his popularity slip slightly in opinion polls since he formed his technocrat government nearly one month ago, his overall support in parliament is strong.

The two biggest groups, Berlusconi’s centre-right People of Freedom Party (PDL) and the centre-left Democratic Party (PD), support the government although both want it to soften the plan’s impact on their core supporters.

Both parties know they cannot sabotage the government despite their misgivings without risking an economic catastrophe that would probably lead to a sovereign default and destroy the euro currency.

“We would have wanted more but we will continue our battle … to support those who don’t have a voice,” Dario
Franceschini, lower house PD leader, said in his pre-vote address to parliament.

“This is just the beginning. Our aim is to save our country,” he said.

PDL parliamentary leader Fabrizio Cichitto, speaking as Berlusconi sat next to him in the cramped party benches instead of the government dais he occupied until last month, said: “We are entering a recession and we realise this calls for extraordinary measures”.

Source: News Agencies


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