Italy's Berlusconi promises emergency deficit decree

Prime Minister Silvio Berlusconi promised on Wednesday an emergency decree to approve austerity measures agreed with the European Central Bank but faced union opposition over concern that the cuts would hit ordinary Italians.

Berlusconi made the promise to pass the decree on budget measures at a special cabinet session expected by Aug. 18 during talks in Rome attended by employers, trade union leaders and government ministers, an official at the meeting said.

Wednesday's talks were aimed at agreeing growth measures and finding ways of fast tracking some 20 billion euros in deficit reduction steps to allow the government to reach its new target of balancing the budget by 2013.

Berlusconi agreed last week to speed up budget measures passed last month after heavy pressure from the ECB and European partners including Germany and France.

But Susanna Camusso, head of the CGIL, Italy's biggest union federation, said the government had not come up with adequate proposals and repeated her call for ECB demands on deficit reduction steps to be made public.

"The meeting did not live up to what was needed given the seriousness of the problems we have and it did not provide the necessary transparency," she said after she had attended the Rome meeting.

"If the austerity budget hits the usual suspects we will mobilise to change it," she told reporters.

Camusso's response suggested that the government had come up with few concrete proposals, underlining the difficulties it faces as it chooses among options ranging from pension measures to a possible wealth tax.

Italian bond yields have eased from the 14-year records of more than 6 percent they hit last week after the ECB stepped into the secondary market to buy Italian debt and stem a market rout which threatened the stability of the whole euro zone.

But the fragile state of sentiment was shown by a slide in the main Italian stocks index, which fell 6.65 percent to a two-and-a-half year low after the biggest one-day fall since the height of the Lehman Brothers crisis in October 2008.

Employers federation Confindustria said the government should decide new public sector spending cuts as well as measures to crack down on tax evasion before the cabinet meeting.

"We all agreed some fundamental principles, that these budget measures should be about rigour and fairness," Confindustria leader Emma Marcegaglia told reporters.

However, she provided no details and ended a brief statement without answering questions from reporters.