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The center-right government launched a financial plan aimed at increasing tax revenues and lowering the spending by introducing a set of measures, some of which are not very clear yet. This plan has passed as decree but, as required by the legislative procedure, it has to be approved by the parliament within the next 60 days in order to become law.
In view of the parliament vote, Prime Minister Silvio Berlusconi sought the opposition support, aware of his coalition’s majority weakening and of the strong tensions which inflame the parliament over the austerity measures. “There is a need for unity in defense of our common currency,” said Berlusconi during a press conference. Nevertheless, the opposition leader Pier Luigi Bersani described the financial plan as a “time-bomb”.
As the Finance Minister Giulio Tremonti explained, the new austerity package consists of a set of cuts in various sectors in order to increase the revenues. The major aim is to reduce the public spending of government, both at central and local level, and to stabilize the country’s finance – as the European Union required. Only few details have been provided in regard to the actual extent of the cuts and the other measures which were confirmed in the latest version of the financial plan approved by the cabinet.
It seems that will be the public health service the most affected by the austerity measures. The estimated cuts in this sector will be heavy and the cost of public medical services will increase, in order to avoid the waste. In most of the public sectors the labour turnover will be stopped until 2014, as also the wage rise for public employees. The retirement age for women will be gradually increased from 2012. Furthermore, a special commission will be established to develop a plan to reduce the politician’s salaries and benefits, which will come into force from 2014 – with the next government – and will bring the Italian politicians’ compensation in line with the European Union’s average.
“Reducing the budget deficit is not just about numbers, it is a political and ethical objective of a country,” said Tremonti in a press conference. “It is reflected in choices of responsibilities between citizens and generations.”
Italy’s public debt is about 120% of its gross domestic product, which is one of the highest in the world and it’s second only to Greece in the eurozone. Because of this the country is under the particular observation of the rating’s agencies and the European Union. Recently Standard & Poor’s downgraded Italy from stable to negative, and doesn’t consider the new austerity package enough for the growth of the country – which was just 0.1% in the first quarter of the year.
Oppositions and some economist criticized the government’s financial plan particularly worried for the current situation of the country. In the meanwhile, the national institute of statistic (ISTAT) published the latest survey’s result about unemployment rate in Italy, which is currently at 8.6%. For young people between 15 and 24 the unemployment is at 29.6% – the highest level since 2004 -, and the rate of inactivity is at 37.8%. Italy and its people have to face a very difficult situation.