The Italian senate has passed an austerity budget approving cuts of 48 billion euros aimed at balancing the country’s budget by 2014.
Italy has one of the largest debt mountains in the eurozone and the measures are designed to avoid the need for a bail-out.
The message from the government, Europe must remain united to escape financial doom.
Economy Minister Giuilo Tremonti said:
“We move forward or we sink. The solution is either political or it isn’t, or it is the same in the whole of Europe or it isn’t. No-one should have any illusions of individual salvation. Just like the Titanic, not even the first class passengers will be saved,” said Tremonti.
Hours before the debate a government bond auction raised 4.97 billion euros through it had to offer what analysts believe is an unrealistic high yield. The only solution is change in government believe opposition senators.
“The government now needs to do the only real service for the country and for economic stability and that is to resign and give way to a new government,” said opposition PD party senator, Giorgio Tonini
In Greece the government has reassured people the country’s banks don’t have a problem. The move comes on the back of the latest downgrade by the Fitch ratings agency and ahead of the publication of stress tests.
“Looking into the eyes of Greek citizens and knowing their anxiety, I assure them there is no problem whatsoever with the Greek banking system,” explained Finance Minister Evangelos Venizelos.
Ninety banks in Europe have undergone stress tests – an annual health check – the results of which will be published imminently.
Euro zone sources believe between 10 and 15 lenders will fail, almost double the number from last year.