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Italy to cut deficit by 45 bln euros by 2013

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Italy to cut deficit by 45 bln euros by 2013

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Italy will tonight adopt emergency budget cuts to reduce its massive public deficit.

The move follows a meeting between Prime Minister Silvio Berlusconi and local government officials.

The cabinet will introduce austerity measures next year worth 20 billion euros and then another round worth some 25 billion the year after to bring the budget into balance by 2013.

Ministry budgets are in line to be axed by six billion euros next year and 2.5 billion the year after. But it remains unclear which ministries will be affected, which has upset the government’s junior partner, the Northern League.

It wants pensions to remain unchanged and instead higher tax to be paid by those earning more than 90,000 euros a year.

The government is aiming to bring the budget into balance by 2013 to reassure panicked markets about the solidity of Italy’s public finances.