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Italy heads for tough austerity plan

Italy heads for tough austerity plan
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Italy is moving ahead with 47 billion euros of austerity cuts.

Prime Minister Silvio Berlusconi and his Finance Minister Giulio Tremonti have agreed on the package which they said should shield Italy from the Greek debt crisis and eliminate the Italian budget deficit.

But the opposition was unimpressed. Rosy Bindi, who heads the Partito Democratico, said: “This package proves that he [Berlusconi] knows the government will not last. It’s a pre-election-package whereas what the country needs is that the government takes real responsibility to create growth without destroying people’s lives.”

The OECD forecasts Italy’s economy will grow by just 1.1 percent this year, with the deficit at 4.5 percent of gross domestic product. Italy’s debt mountain, at 120 percent of GDP, is one of the world’s biggest.

The bulk of the savings needed to eliminate the deficit by 2014 will come from cuts in spending by government ministries and local authorities and reduced tax breaks for companies and families.

The plan is intended to show financial markets and the European Union that Rome is serious about balancing its budget.

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