Italian workers stage general strike


Workers across Italy went on strike today as the centre-right government of Prime Minister Silvio Berlusconi rushed to secure parliamentary backing for austerity measures vital to keep European Central Bank support.

The eight-hour strike called by the CGIL, Italy's largest union with six million members, disrupted public transport including air traffic, underlining a sense of emergency in the euro zone's third largest economy.

The strike comes as Italy's government said today it would raise value added tax and introduce a constitutional balanced budget amendment as part of revised austerity measures to stave off a looming financial crisis.

The measures, announced after days of intensifying pressure on Mr Berlusconi, will see the 20 per cent VAT bracket raised to 21 per cent and a special 3 per cent levy on incomes higher than €500,000.

Changes to retirement ages for women in the private sector will also be introduced from 2014, a statement said.

Federico Ghizzoni, chief executive of Unicredit, Italy's biggest bank said Europe needed to decide whether it wanted to retain the single currency or "give up". This is a test, he told a banking conference in Frankfurt, calling for more decisive action to stem the crisis.

Today's strike, called to protest against the €45.5 billion austerity measures, coincided with the start of a debate in the Senate which the government hopes will see swift approval before the package moves to the lower house.

Many of the measures originally criticised by unions have been dropped but the protests brought out simmering anger at the burdens imposed on ordinary Italians by more than a decade of economic stagnation.

The CGIL, which has not been joined by more moderate unions, said about 58 per cent of workers were on strike in sectors affected by the stoppage, roughly in line with other big protests this year.

Trade union protests were also planned in Spain, where parliament is debating inserting a German-style debt brake into the constitution to give greater force to deficit-cutting measures designed to regain financial market confidence.

Spanish unions called evening protest marches to denounce a fiscal rule they say will result in cuts to social spending and affect the poorest in society.

The euro zone's debt crisis appears at risk of spiralling out of control amid doubts about the willingness of Italy and Greece to push through unpopular austerity measures demanded by their partners, and hardening opposition to further aid in EU paymaster Germany.