Thursday, December 22, 2011

Italy parliament seals austerity budget

Italy's Senate passed a vote of confidence in the government of Prime Minister Mario Monti today that put the final seal on an emergency austerity budget rushed through to restore market confidence in the euro zone's third biggest economy.

The upper house voted 257 to 41 for the government, following a similar easy win in the lower house last week.

Monti, said he was happy with the vote and Italy could hold its head high in Europe after passing the package of spending cuts, tax rises and pension reform.

The budget is intended to reverse a collapse of market confidence which has pushed Italy's borrowing costs to untenable levels and put it at the heart of Europe's debt crisis.

Addressing the Senate before the vote, Monti said his technocrat government had to push through the budget as fast as possible.

"Today this chamber concludes a rapid, responsible, complex job... on a decree that was passed in extreme emergency and that enables Italy to hold its head high as it faces the very serious European crisis," Monti declared.

The prime minister, appointed only five weeks ago, said that after addressing Italy's massive debt in the 33 billion euro ($43 billion) budget, the government would turn to the country's second economic millstone, a decade of near zero growth.

Investors turned their spotlight on these two problems in July, sending Italy's borrowing costs rocketing.

Monti replaced Silvio Berlusconi as prime minister last month and formed an administration of technocrats with broad parliamentary support to pass the so-called "Save Italy" decree.

Berlusconi's failure to tackle major reforms and restore market confidence brought Italy to the brink of economic catastrophe, although market pressure has continued since Monti took power.