Wednesday

11th Dec 2019

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. 30-day free trial.

... or join 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.

Opinion

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. Hungary asked to apologise after council leak
  2. MEPs: Finnish budget proposal 'impossible to implement'
  3. EP committee supports 'Future of EU Conference'
  4. EU survey: climate change must be parliament's priority
  5. Zahradil resigns as rapporteur on EU-Vietnam trade deal
  6. Russia plans 'Arctic Air Defence" with S-400 missiles
  7. Belgium: King does another round of consultations
  8. Thousands protest Orban's theatre clampdown

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Hungary quizzed over EU rules amid twitter row
  2. Spanish King meets party leaders to break deadlock
  3. EU alarmed by prospects of battle for Tripoli
  4. EU must manage climate and industry together
  5. Does Malta's Labour Party now belong in S&D?
  6. Green Deal targets pit Left against Right in parliament
  7. Human rights abusers to face future EU blacklists
  8. Zahradil 'conflict of interest' probe may flounder

Join EUobserver

Support quality EU news

Join us