With Thursday’s parliamentary vote on its massive austerity package Italy hopes to avoid contagion from Greece and the euro zone’s other weaker economies.
Addressing the Senate shortly before the vote, Economy Minister Giulio Tremonti stressed this is not just an Italian problem.
He said Europe needs a political solution to the spreading debt crisis or no country – even Europe’s strongest economies – would be spared dire consequences: “So now we have reached a time of dilemma and drama for Europe and the euro – we move forward or we sink. No-one should have any illusions of individual salvation. Just like on the Titanic, not even the first class passengers will be saved.”
Italy has avoided the worst of the financial crisis thanks to strong controls on public spending, a conservative banking system and a high level of private savings. But the markets have been unnerved by Rome’s 1.8 trillion euros of public debt.
Just hours before the Senate vote the Italian Treasury managed to sell almost five billion euros worth of long-term government bonds, but only by offering high rates of return and analysts said that is unsustainable.