Italy approves 24 billion euro budget cuts by Magdalena Rosova

Italian government has approved Tuesday a decree putting across budget cuts worth 24 billion euros. The government of Prime Minister Silvio Berlusconi is trying to reduce the public deficit. The decree should stabilize the public finances and help the government to cut the public deficit from 5.3 percent of gross domestic product in 2009 to 2.7 percent in 2012. The measures were made up of spending cuts and revenue increases. EU set new limit of three percent, Italy's plan should bring the country into line with the limit. The measures are created cuts to public spending. After a cabinet meeting on Tuesday, the government said in a statement that the decree should also inc! rease revenues. Gianni Letta, close cooperator of Berlusconi warned that very heavy sacrifices need to be done in order to save the country from going the same way as Greece. The decree will effect civil servants whose salaries will be frozen for three years. Wages of ministers and other government officials will be cut as well. Tax increase will not impact average Italians. New taxes will be imposed on stock options and private sector executives' bonuses. Immediately after announcing the plan Pier Luigi Bersani, the head of the opposition Democratic Party, stood up to criticize it. He finds the package full of indiscriminate cuts that do not make anything structural. Italy followed example of Spain, Greece, Portugal and Britain which also set austerity measures to encourage confidence in indebted European economies. The economies of countries of EU slumped with the global crisis and their deficits unexpectedly soared.

related story (sgx17382): http://www.theglobeandmail.com/report-on-business/economy/it...

by Magdalena Rosova for Cantell TV (http://cantell.tv)

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