21st Sep 2020

Berlusconi struggles to implement austerity measures

  • Berlusconi has promised bold reforms in order to allay market fears (Photo: The Council of the European Union)

Italian leader Silvio Berlusconi has announced changes to his previously-announced austerity measures due to tensions in the governing coalition.

Under the new version of the package, the government has decided to scrap a so-called solidarity tax of 5 percent on income of more than €90,000 a year, rising to 10 percent for income above €150,000.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Parliamentarians, whose salaries can go up to €140,000 a year, will still have to pay this tax, however. Meanwhile, constitutional changes are foreseen to halve the number of MPs - if the needed two-thirds majority can be summoned in favour of the move.

The solidarity tax move will take €2 billion out of the proposed cuts.

The government also agreed to relax planned spending cuts in regional budgets by €2 billion. But it said that the original value of the austerity package - €45 billion - will be maintained due to "reinforced tax collection."

The amendments came after a seven hour meeting in Milan between the Berlusconi camp and coalition partners Lega Nord, which have strong support at local level.

They also follow protests by mayors from all over Italy in Milan and criticism from within Berlusconi's own party, People of Freedom, which advocates low taxes.

For its part, the centre-left opposition Democratic Party criticised lack of detail on the latest changes and said the issue of stimulating growth - also major problem in Italy - had been left "completely empty."

The move is likely to trigger renewed market scrutiny about the government's handling of the crisis, after the European Central Bank (ECB) agreed to buy Italian bonds only after promises of structural reform.

A bond sale is scheduled for Tuesday and could serve as an indicator as to whether the ECB action and the austerity package are perceived to be working.

Investors' worries about Italy's ability to repay its €1.9 trillion debt and a spill-over effect from Greece pushed the 10-year bond yield to around 6.4 percent on the secondary market in early August before the ECB stepped in, pushing yields back towards the 5 percent level. The Tuesday auction is the first since the ECB move.

Berlusconi pep talk struggles to persuade markets

Italy's Prime Minister Silvio Berlusconi on Wednesday sought to allay market fears about a potential default. But some experts say the country's fiscal position is unsustainable.

Berlusconi pledges to leave politics in 2013

Italy's scandal-prone Prime Minister Silvio Berlusconi has said he is "absolutely not" seeking re-election in 2013 and indicated he would like former justice minister Angelino Alfano to succeed him.


Italy: Is there a way out of the woods?

It’s time to finally bite the bullet or Berlusconi may soon have to add yet another, less than flattering point of note to his CV: bringing down the eurozone, writes Vincenzo Scarpetta.

ECB returns to markets to help Italy and Spain

The European Central Bank has decided buy bonds from troubled eurozone countries after a five-month pause in a bid to stem the crisis from spilling to Italy and Spain.

Berlusconi narrowly wins confidence vote

Italian Prime Minister Silvio Berlusconi narrowly won a vote of confidence Friday, cementing his reputation as something of a Houdini of his country's politics where he has reigned almost uninterrupted since 1994.

Cracks show in EU austerity doctrine

If the subtle change in emphasis in the EU’s discourse on austerity is to be believed, some in the bloc are beginning to be much more open to policy options beyond public-sector cutbacks.

News in Brief

  1. Novichok poison creator apologises to Navalny
  2. A few thousand march against corona measures in Dusselfdorf
  3. Report: UK banks to close accounts of EU residents
  4. Madrid lockdowns expose economic tension
  5. Belarus president puts army on EU borders
  6. US: Lebanese group hoarding explosives in EU states
  7. Russia loses EU sanctions appeal
  8. UK guidelines explain Brexit treaty-violation plan

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  2. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  3. UNESDAReducing packaging waste – a huge opportunity for circularity
  4. Nordic Council of MinistersCOVID-19 halts the 72nd Session of the Nordic Council in Iceland
  5. Nordic Council of MinistersCivil society a key player in integration
  6. UNESDANext generation Europe should be green and circular

Latest News

  1. Cyprus leaves EU ministers red-faced on Belarus
  2. EU seals new Covid-19 deal amid global distribution fears
  3. German court hears harrowing testimony of Syria torture
  4. Turkey, Belarus and migration in the EU spotlight This WEEK
  5. Could we found a new EU without Hungary and Poland?
  6. Commissioner: No one will like new EU migration pact
  7. Buying an EU passport 'no use for evading sanctions'
  8. MEPs call for first-ever EU law on Romani inclusion

Join EUobserver

Support quality EU news

Join us