Italy takes EU lead on debt reduction

City A.M. Reporter
ITALY is set to follow in Greece’s footsteps by being subjected to tough austerity measures to curb its ballooning deficit, the country’s economy minister said yesterday.

Giulio Tremonti told the Italian Il Corriere della Sera newspaper that the austerity package, worth €27.6bn (£23.5bn) over the next two years, would include measures similar to those announced by other European nations.

He said the measures might include broad reductions in public salaries, as in Spain and Portugal, and cuts to the number of state employees, as in France, by hiring only one for every two employees who retire.

The package is expected to be worth just over €13bn in 2011 and over €14.5bn the following year.

News of the Italian measures came as a poll yesterday in Spain showed that the country’s conservative opposition party has more than doubled its lead over the ruling Socialists since the government introduced new spending cuts to rein in its budget deficit.

The Demoscopia poll, published in the El Pais left-wing newspaper, showed the Popular Party (PP) has a 9.1 per cent advantage over Prime Minister Jose Luis Rodriguez Zapatero’s Socialists in the national parliament, versus a 4.2 per cent lead two weeks ago. The poll was carried out on Thursday, a day after cuts in civil servant pay and a pension freeze were announced.

Zapatero, who has only a simple majority in parliament, could now face harder times mustering support to pass legislation, just as he needs to implement urgent measures to counter the deepest recession in 50 years.