ECB chief Trichet warns Italy to stick with austerity

Italy has received a stern warning from the head of the European Central Bank to stick to its austerity plan after it failed to pass key measures.

Mr. Trichet was attending an annual economic forum in Italy

Jean-Claude Trichet told a forum in northern Italy that sticking to the plan was “absolutely decisive” to Italy’s credit worthiness.

Italy faces a debt mountain of 1.9 trillion euros (£1.7tn; $2.7tn).

But Prime Minister Silvio Berlusconi, beset by personal scandals, has failed to pass clear measures.

The ECB has been buying Italy’s bonds in the market to try to hold down yields and stop its borrowing costs spiralling out of control.

There has been some speculation that it may reduce its purchases to put pressure on Rome to act more quickly to pass a much disputed 45.5bn euro package of austerity measures now going through parliament.

However, any sign of the ECB cutting back its bond-buying programme would risk triggering a market sell-off that could tip the eurozone’s third economy into a Greek-style emergency, Reuters news agency reports.

Italian U-turns

Mr Trichet declined to discuss the ECB’s bond-buying plans at Saturday’s conference, in Cernobbio on northern Italy’s Lake Como, but was quoted by Reuters as saying the ECB would discuss it at a meeting next week.

He urged Italy to push through the package of cuts announced in early August, saying: “It is essential that the target which was announced to diminish the deficit will be fully confirmed and implemented.”

He described as “extremely important” all measures to improve the “flexibility” of Italy’s economy.

Both industrialists and union leaders have accused the austerity plan of relying too much on spending cuts and new taxes, and offering little to stimulate growth or to encourage job creation.

Disagreements over taxes and pensions within Mr Berlusconi’s coalition government led to a series of U-turns over the past week.

A tax on high earners and a rise in the pension age were proposed, then dropped, within days.

New doubts about the ability of Mr Berlusconi to focus on the austerity plan were raised when magistrates arrested a businessman linked to a 2009 prostitution scandal on suspicion of trying to extort as much as 0.5m euros from the prime minister.

Advertisements

One Response to ECB chief Trichet warns Italy to stick with austerity

  1. There are certainly a lot of details like that to take into consideration. That is a great point to bring up. I offer the thoughts above as general inspiration but clearly there are questions like the one you bring up where the most important thing will be working in honest good faith. I don?t know if best practices have emerged around things like that, but I am sure that your job is clearly identified as a fair game. Both boys and girls feel the impact of just a moment’s pleasure, for the rest of their lives.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: