italy announces 24 million euro austerity measures
News Posted On: 02 June 2010
Italy has become the latest Eurozone country to announce massive budget cut-backs in order to bring down roaring budget deficits.
In Italy's case, Prime Minister Silvio Berlusconi has announced cut-backs worth 24million Euros ($30 million).
The cut-backs include a three-year wage freeze for civil servants and a crackdown on tax evasion, the government said in an e-mailed statement after a 90-minute Cabinet meeting in Rome on Tuesday night.
"Our priority is to reduce public spending and the government presence, while keeping what is key to social cohesion," Finance Minister Giulio Tremonti told reporters in Paris on Wednesday. "A considerable amount of funding of ministries and local authorities can be reduced. Our numerical standard for cuts is 10 percent."
When the credit crunch went from being a US problem to a global one as we transversed between 2007, into 2008 and worsened toward the end of 2008 into 2009, few people would have predicted that developed European countries would come close to defaulting on their national debts.
But that is exactly what happened in the case of Greece. In fact the Mediterranean country looked so likely to default that it became practically impossible for it to open new lines of credit. Quickly other countries with the same laid-back lifestyle and debts began to be tarred with the same brush and the disease spread to Portugal and Italy -- the UK and Ireland also have huge deficits but have gotten off easier (with debt-rating agencies etc) because of the make-up of their economy and governments.
Italy is the third biggest EU economy, and was one of the last to see recovery into the third quarter of last year. The success of these austerity measures could prove to be crucial to the future of the European single currency -- so, fingers crossed.
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