Hinting at tax breaks, Italian prime minister Romano Prodi in his end-of-year press conference has said addressing concerns over purchasing power will be among his government’s top themes in 2008. His popularity at a record low, Prodi is to hold crunch talks with his coalition partners in two weeks’ time. Failing to curry more political support might usher in elections.
Prodi said: “We will propose a broad agreement between workers and employers for higher wages, higher productivity and a substantial reduction in the tax burden for workers who earn low-to-medium level salaries.” The lowest unemployment rate in 25 years, 5.6%, notwithstanding, Prodi noted that “salaries are losing purchasing power.”
Meanwhile, in Germany, Michael Hechter, with the Institute for Economic Research, said his country couldn’t expect the same euphoria over the boom in German commodities to be repeated in the new year.
A poll of major German industrial associations stressed confidence, though potential problems were acknowledged, such as not enough qualified workers, the strong euro, rising energy prices and the US credit crunch. Several economic think tanks recently cut their economic growth forecast to less than two percent.