ITALY’S new Prime Minister yesterday vowed to emphasise growth as well as austerity in a new effort to relieve some of the pain facing the struggling country.
Enrico Letta is likely to abandon a sales tax rise planned for the summer, scrap Mario Monti’s housing tax and shake up the welfare system.
Parliamentarians approved the new government, a coalition of three parties plus a handful of technocrats including a top central banker. And markets backed the arrangement, buying €3bn (£2.5bn) of 10 year bonds at an auction yesterday at just 3.94 per cent, the lowest rate since 2010.
Letta was appointed last week after a two-month stalemate which saw no government formed in the wake of February’s tight general election.
Markets had worried that Mario Monti’s steps to get the public finances back in line after Silvio Berlusconi’s profligate premiership could be undone.
But they have since shown relief at Letta’s appointment.
Italy’s FTSE MIB stock index rose 2.2 per cent on the day and Spain’s IBEX 35 increased 1.85 per cent. The positive sentiment also spread to the US, pulling the Dow Jones up 0.7 per cent.