It is Italy’s turn to tighten its belt as the European debt crisis deepens.
A painful austerity package is due for approval today. By tightening the screw, Silvio Berlusconi’s government hopes to avoid a Greek-style tragedy.
“This is a series of burdensome, very harsh sacrifices that we are forced to impose, hopefully in a temporary way,” announced Berlusconi’s top aide Gianni Letta. “There is a precise timeframe to it, in order to save our country from…..a Greek outcome, as it were.”
Italy has been spared the worst of the market volatility since Greece’s debt crisis exploded. It is thus under less pressure to adopt draconian cuts.
But, according to the IMF, its public debt will be more than 118 per cent of GDP this year, rising to more than 120 per cent in 2011.
Italy’s austerity budget is expected to cut public sector hiring and pay, temporarily block those set to retire and reduce funding to local government.