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Italy PM tells MPs to back tough spending cuts

Italy PM tells MPs to back tough spending cuts
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As speculation mounts that Italy will be the next debt domino to fall in the eurozone crisis, Prime Minister Mario Monti has told MP’s to back his tough austerity measures.

His speech to parliament came hours after Austria’s Finance Minister said she thought that Italy may follow Spain in needing access to EU rescue funds.

Monti said bringing down the cost of borrowing was vital: “If measures are instigated that allow growth, then the financial markets will ensure that Italy’s finances are sustainable. We will pay a lower spread, interest rates will be lower too and businesses will have an easier time rather than be penalised for investing and this will protect us from contagion.”

Meanwhile Spanish Prime Minister Mariano Rajoy sought to play down Madrid’s 100 billion euro bailout. Critics say, until now, he has avoided using the term rescue.

Rosa Díez, leader of the Union, Progress and Democrat party told him: “Nothing will happen if you admit the truth, if you call the rescue a rescue. Say it with me – rescue. Limited rescue, financial rescue, light rescue, marvelous rescue, but rescue.”

Rajoy once again refused to mention the word rescue: “The European Union will lend 100 billion euros. That money will be used by the banks up to a ceiling and they will need to repay it at some point, so that what others did with their public debt, we will do with the help of the European Union.

The Spanish government has refused to debate the terms of the bailout in parliament until after an EU summit at the end of the month. By then parliament will be in its July recess.