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Merkel calls for Italian cuts to steady eurozone

The Local · 11 Jul 2011, 13:58

Published: 11 Jul 2011 13:58 GMT+02:00

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"I think a very important signal, which must be sent by Italy itself, would be the approval of a budget involving the necessary savings and budgetary consolidation," Merkel told reporters in Berlin.

"I have full confidence that the Italian government will pass exactly such a budget. I spoke yesterday (Sunday) by phone with Italian Prime Minister (Silvio Berlusconi) about precisely this topic.

"This would send a signal that Italy feels obliged to carry out consolidation and tackle its debts," Merkel said in Berlin following talks with Icelandic Prime Minister Johanna Sigurdardottir.

"The euro itself is stable, but in some countries there is a debt problem," Merkel said.

Berlusconi's government has earmarked about €40 billion ($56.5 billion) in savings over the next four years to stabilise the country's public finances, Economy Minister Giulio Tremonti said earlier this month.

Rome has already pushed through spending cuts of €25 billion for 2011-12 and the latest package should reduce the budget deficit to just 0.2 percent of output by 2014 from 4.6 percent last year.

The measures includes freezing civil servant salaries and recruitment, cutting local government spending and health and administrative costs, while raising taxes for banks and insurance companies.

Speculation has risen in recent days that Italy, which has the eurozone's third-biggest economy, could follow Greece, Ireland and Portugal in needing outside help.

Story continues below…

Italy's accumulated public debt is equal to about 120 percent of gross domestic product (GDP), one of the highest rates in the world. Borrowing costs on Italian debt reached record levels on Monday.


The Local (news@thelocal.de)

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Your comments about this article

18:31 July 11, 2011 by MJMH
Say goodbye to the Euro and the European Union.
18:41 July 11, 2011 by r2d2c3po
More proof the EU is a joke. 1st they let in countries that are liars then do not follow their own rules and then compound the stupidity by giving Greece a bailout. Now they talk of another bailout instead of kicking out the countries that should never have been let in in the 1st place.
19:03 July 11, 2011 by MJMH
And now even the countries that did everything right want out. Let's just hope the leaders tell the whole truth for once (and not make up excuses) and the EU just goes away like the Soviet Union.
03:00 July 12, 2011 by german-guardian
@ r2d2c3po

people like you are so steriotyping. Your are blaming the whole european union just because of one conflict. So they have a small conflict; every union or business could have one some day, they important thing is to figure out a way to keep it standing.
07:14 July 12, 2011 by mashlakhito
A "company" where most of its departments are non-functional can not survive. Greece, Portugal and Ireland are relatively small "departments" within the bigger EU "company". However, should Italy and/or Spain be in much further trouble then the EU "company" will not sustainable.

At a certain point, "top management" should come to their sense and make the bold move of either dissolving the "company" or break-off the non-functional departments. What's the point of the successful, countries like France, and Germany who are hard-working, abide by their own standards and are "profitable" to keep on covering for the losing countries.

The EU should just break up, and let every country vie for itself. Survival of the strongest. It might be painful in the short-term with all the loses accrued to banks and bigger establishements, however, in the long-run countries that should be strong and profitable will be, and those countries that always over-spend and go on spending sprees as if they have unlimited loads of cash, well those countries will either have to come to their senses or wither and disappear.
08:08 July 12, 2011 by german-guardian
@ mashlakhito

You don't give up on the departments that are not functioning. You help them function and later they will help the business grow. It is a very false approach that certain people think, if something is slow or does not function at first, it will not work in the future. In reallity there are many valuable countries like Italy, that they have the legendaryness in their blood just like us the Germans. They just need the spark of help to blossom and help Europe. I think people should understand that helping the valuble can help the world tomorrow. Imagine there are two countries: one is Italy that could have a futrue hard time with its economy and the other country is China that has a current good economy. I will say partnering with Italy and staying away from China is the right decision, because Italy has such a talent in its roots and it is close enough to us Germans that helping Italy would unlish a chain reaction that not only will help Germany, but Europe and the world, and it would be a better outcome for Germany. We should help the countries that are close to us culturally and have the same root as us. In the other hand countries like China, have not talent, they can only immitate and copy other countries technologies and sustain them. China's only power is its huge population that it has generated after 1950s for what ever reason and its percistency to immitate others. Countries like China will not stay at top for long. However countries like Germany and Italy are creative, and talented and they should help teach other get better. Once they Get better, they can be the best of best that no one can ever reach up to them.
18:21 July 12, 2011 by Englishted
"The euro itself is stable, but in some countries there is a debt problem," Merkel said.

The countries with no problem are the new ones the reason they get subsides,

from the countries now in dept.

My problem is everyone is being held to ransom by credit agencies ,speculators or correctly gamblers that are moving from market to market without any control on them.

It's called the free market capitalism and it sucks for all but very few at the top.
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