Italy approves €24bn austerity package
Italy is the latest euro zone nation to introduce a three-year austerity plan worth €24 billion (£20 billion), in a bid to bring its deficit down to below 3% of GDP by 2012 – from 5.3% currently.
Greece, Spain and Portugal have already implemented tough austerity measures, but they have angered workers and led to violent protests.
Italy will introduce measures to reduce public sector pay and will put a freeze on new recruitment.
However, public sector pensions and local government spending are also expected to be hit.
The measures have been attacked by CGIL, Italy’s biggest trade union federation, and the centre-left opposition as unfairly targeting the lowest paid among 3.5 million public sector workers.
Yesterday, stock markets across the world fell sharply over ongoing fears about the debt crisis in the euro zone.
London’s FTSE fell below the crucial 5,000 mark, while Germany’s Dax index and France’s Cac 40 index fell.
The debt crisis in Greece, particularly, has devalued the euro and sent stock markets into freefall recently but Spain is now adding to the problems after the International Monetary Fund (IMF) issued a severe warning to the Spanish economy suggesting it needs “far-reaching” reforms to ensure its recovery.