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ECB asked Italy for more austerity: Trichet

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ECB asked Italy for more austerity: Trichet
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The European Central Bank asked the Italian government to implement further austerity measures in return for buying its debt, its president Jean-Claude Trichet said in an interview on Tuesday.

The Corrierre della Sera newspaper first reported that Prime Minister Silvio Berlusconi received a “secret letter” from the ECB, insisting on tougher austerity measures to balance the country’s budget by 2013.

Trichet confirmed the existence of the letter in a French radio interview.

“We asked the Italian government to take a certain number of decisions, which have been taken, and in particular to speed up their return to a normal budgetary situation. We asked the same of the Spanish government.”

It might explain why the Italian prime minister surprisingly announced a raft of new measures last Friday.

That marked something of a U-turn for Berlusconi, who had previously defended the “healthy condition” of the Italian economy.

The premier said last week: “We must recognise that the world has entered a financial crisis that has hit every country… that does not respect at all the economic reality and the economic fundamentals.”

Berlusconi finds himself, once again, under fire from the opposition which has accused him of transferring control of Italy’s economic and financial system to the larger European nations.