Monti strenuously defends €24bn 'Save Italy' budget

URGENT MEASURES: ITALIAN PRIME Minister Mario Monti yesterday strenuously defended the terms of the €24 billion budget approved…

URGENT MEASURES:ITALIAN PRIME Minister Mario Monti yesterday strenuously defended the terms of the €24 billion budget approved by his cabinet on Sunday.

Presenting the measure to the Lower House of parliament, the prime minister repeated yet again that Italy was in “an extremely serious” situation adding, however, that he was convinced that Italy would not collapse. “I have only a limited mandate, time wise, and therefore we are introducing urgent measures . . . The reduction of Italian national debt is a total necessity and every time we deviate from doing that we risk plunging the country into an abyss. The example of Greece is very close at hand.”

Repeating the catchwords of his budget presentation, namely “financial rigour, growth and development”, Mr Monti warned Italians that the only future for Italy lay within the euro.

“Outside the euro and the common EU home, there is only the abyss of poverty and economic stagnation, the collapse of wages, isolation and above all the lack of future prospectives for both the country and the young. There is no alternative,” he said.

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Mr Monti’s “Save Italy” budget, drawn up in just 17 days since his appointment as prime minister following the resignation of media tycoon Silvio Berlusconi, contains a far-reaching set of proposals.

Penison reform, a two-point hike in VAT rates, cuts to the cost of local provincial government, tax incentives for companies which employ either women or young people, the re-introduction of property rates, a tax on luxury items such as yachts and private planes and anti-money laundering measures form the basis of the package.

Earlier in the day, during a briefing with the resident foreign press corps in Rome, the prime minister had repeated his faith in the euro, pointing out that while various countries may have sovereign debt problems, the euro currency is not in crisis but rather has maintained its value, thanks “to the excellent work done by the ECB”.

Market results yesterday would appear to support the prime minister’s theory given that the spread between Italian and German government bonds sank to below the symbolic figure of 400 points, while interest rates on Italian 10-year bonds sank to 5.98 per cent, well below the 7 per cent plus figures of recent weeks.

Calling this a “vital week” for the euro, Mr Monti expressed the hope that the “best practices” of those fellow EU countries which are not in the euro zone would be included in the ongoing debate on the future of both the EU and the euro. Asked about his recent meeting with German chancellor Angela Merkel and French president Nicolas Sarkozy almost immediately after he took office, Mr Monti said the encounter had been planned even before his appointment as prime minister.

The Italian prime minister expressed his gratitude for the support he had received from both Dr Merkel and Mr Sarkozy, pointing out that both of them had offered to travel to Rome as a gesture of support during the period immediately prior to his appointment.

“I thanked them profusely but I asked them not to do that,” he said. Mr Monti defended the terms of his budget, arguing that any depressing impact from some measures would be far outweighed by the kick-start to growth and development which he expects from many of the other measures.