Mario Monti, prime minister, on Sunday night underlined the gravity of the crisis facing his country, but promised that the “multitude of sacrifices” he was implementing in his “Save Italy” decree would also be used to promote economic growth by reducing the cost of labour.
Rome’s planned tax increases, pension changes and spending cuts amount to a savings of €30 billion over the next three years, of which about €10 billion will be put back into the economy through measures to promote growth, including cuts in the cost of labour and incentives to get more women and young people into the workforce.
If extra measures are needed to ensure Italy remains on course to balance its budget by 2013, then the government proposes to increase value added tax in the second half of 2012.
The government’s first macro-economic forecasts project a fall in Italy’s GDP in 2012 of 0.4 to 0.5 per cent and zero growth in 2013.
Mr Monti said his reforms were aimed at boosting competition, attacking “privileges and clientele-ism” and opening the labour market to more women and young workers. He said he would renounce his salary. Stressing his commitment to fight tax evasion, Mr Monti said he would impose a retroactive tax of 1.5 per cent on capital that benefited from a tax amnesty under the previous government.
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