Monti vows to cut as Eurozone jobs vanish

ITALIAN Prime Minister and finance minister Mario Monti vowed to meet fiscal targets by setting out a fresh round of austerity measures even as data showed that Eurozone unemployment has hit a euro-era high.

Monti, who was attending his first meeting as finance minister, also denied that Italy is seeking a rescue from the IMF, saying that the country will eliminate its structural deficit in 2013 “even in the face of a possible deterioration in the economic cycle”.

But he admitted that Europe must use the credibility of the European Central Bank, the IMF and its bailout fund “better and more consistently”.

Monti’s promise means Italy is planning to eliminate its deficit three years before the UK is now scheduled to do so after chancellor George Osborne pushed back his target yesterday.

The FSA has told banks to scale up their contingency planning for a euro break-up after chief executives met with Andrew Bailey last week.

There is a gathering sense of urgency fuelled by a run of bad economic data, with all-time Eurozone unemployment highs led by jumps in stricken Italy, Greece and Spain.

But markets rose yesterday after six central banks announced measures to boost dollar liquidity in an effort to help European banks with funding problems.

And Eurozone finance ministers said on Tuesday that they are discussing plans to boost the resources at the IMF’s disposal, but it is not clear where the money will come from.

The US, the IMF’s biggest backer, is battling its own debt problems. Some in the City have suggested that the IMF could be used to lure Chinese money into funding a rescue, since Beijing has not been tempted to invest directly in the Eurozone’s complicated bailout fund.

“It will be interesting if Lagarde starts spending a lot of time in Beijing,” said one senior banking source.

The joblessness data was worse than expected yesterday. Unemployment in the currency union rose to 10.3 per cent, up from 10.2 per cent in the previous month and 10.1 per cent in October 2010.

In Spain, the figure rose 0.3 percentage points to 22.8 per cent, with youth unemployment up to 48.9 per cent.

Italian unemployment hit 8.5 per cent, from 8.3 per cent in September, with 29.2 per cent of under-25s out of work.

Inflation remained above target in the currency area, at three per cent for the third month in a row.

“High inflation and rising unemployment are clearly putting strong downward pressure on real incomes at a time when fiscal austerity is already hitting households hard,” said Jennifer McKeown of Capital Economics.