Saturday

22nd Jul 2017

Italy eyes €27.6 billion cuts to avoid debt crisis

  • Close up of euro banknote, showing Italy and Greece. Rome has adopted cuts to ward off market attacks (Photo: Alessandro Marotta)

The Italian government is eyeing spending cuts worth € 27.6 billion over the next two years, a move similar to those recently announced by Spain and Portugal in order to re-establish market confidence in euro economies.

"The measures which will make up the budget adjustment in the next two years will not be very different from those being taken by Paris, Madrid, London, Berlin and Lisbon," economy minister Giulio Tremonti told the Corriere della Sera newspaper on Sunday (16 May).

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The deficit-capping measures, worth €13 billion in 2011 and more than €14.5 the following year, are expected to be approved by 1 June. They are to include salary cuts in the public sector, as in Spain and Portugal, and a freeze on hiring new staff.

Italy's corruption-prone southern regions, which already face problems in the healthcare sector, may see Rome slash development funds and raise local taxes.

Prime Minister Silvio Berlusconi's government has pledged to reduce the country's public deficit from 5.3 percent of gross domestic product (GDP) last year to 2.7 percent in 2012. According to the rules of the eurozone, its 16 members need to keep their deficits below three percent of GDP, but most countries have breached the threshold amid the economic slump and dwindling state revenues in the past two years.

In recent weeks, Italy has been mentioned along with Spain and Portugal as countries which risk repeating a Greek-type debt scenario. Rome's public is much lower than Lisbon's (9.4 percent of GDP) and Madrid's (11.2 percent of GDP), however.

Portugal last week announced deep wage and spending cuts along with higher taxes to cut the public deficit by more than half. Spanish Prime Minister Jose Luis Rodriguez Zapatero also announced austerity measures totalling €15 billion, including cutting civil service pay by five percent. Spain is also considering tax hikes.

For his part, French Prime Minister Francois Fillon last week announced a three-year freeze on public spending, but rejected opposition and trade union accusations that the government had adopted "austerity measures."

Deficit reduction measures are not being taken by southern eurozone countries alone. In non-euro-member Britain, among the first steps taken by new Conservative Prime Minister David Cameron on Thursday was to order a symbolic five-percent salary cut for cabinet members.

New EU member Romania last week announced a sweeping 25 percent cut in public officials' salaries and slashed old age pensions 15 percent from 1 June.

Hundreds of pensioners and public employees protested against the decision last week, with labour unions saying they plan a "Greek-style" protest on Wednesday to force the centre-right government to drop its plans.

Greece to get €7.7bn loan next week

The ESM, the eurozone emergency fund, agreed on Friday to unblock a new tranche of aid as part of the bailout programme agreed upon in 2015.

EU and Japan agree on free trade

Japanese prime minister and EU leaders to endorse major trade deal on Thursday in anti-protectionist message to Trump.

EU and Japan closing in on trade deal

[Updated] The EU and Japan edge closer to securing a free trade deal on Thursday, ahead of the G20 summit at the end of the week where US protectionism will be an issue.

Opinion

Greece needs a new plan

Two years into its third bailout, Greece needs to combine the necessary fiscal targets with a new vision. This can be done in the context of the ongoing industrial revolution.

Opinion

Ceta and pesticides: A citizens' rights issue

The trade agreement with Canada will begin to apply on 21 September. But there is still a potential conflict on the right to data protection vs. the right to access information.

News in Brief

  1. Polish parliament adopts controversial justice reform
  2. GMO opt-out plan unlikely to go anywhere in 2017
  3. Slovak PM threatens to boycott inferior food
  4. France takes Google's 'right to be forgotten' to EU court
  5. Turkey accuses German companies of supporting terror
  6. Israel's Netanyahu caught calling EU 'crazy'
  7. UK does not collect enough data to expel EU nationals
  8. Polish president threatens to veto justice reform

Stakeholders' Highlights

  1. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  2. ACCAAnnounces Belt & Road Research at Shanghai Conference
  3. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  4. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  5. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  6. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  7. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  8. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  9. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  10. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way
  11. European Friends of ArmeniaEuFoA Director and MEPs Comment on the Recent Conflict Escalation in Nagorno-Karabakh
  12. EU2017EEEstonian Presidency Kicks off Youth Programme With Coding Summer School

Latest News

  1. Dutch coalition talks lengthiest in 40 years
  2. Polish parliament steps up showdown with EU
  3. EU urges UK to clarify its Brexit positions
  4. Law expert: direct EU powers have become too complicated
  5. Winter is here for Spitzenkandidat, but he'll survive
  6. Mafia money pollutes the EU economy
  7. Central Europe should be wary of Brexit stopping
  8. Poland's 'July coup' and what it means for the judiciary