Germany says eurozone can't save Italy
The Local · 7 Aug 2011, 11:38
Published: 07 Aug 2011 11:38 GMT+02:00
Economic advisors told the news magazine Der Spiegel on Sunday that the European Financial Stability Facility (EFSF) is only capable of helping smaller countries, not economies the size of Italy's.
Government experts say Italy's eurozone partners cannot cover the guarantee for Italy's state debt of over €1.8 trillion.
The report says Berlin is now insisting that Italy find its own way out of its crisis through budget cuts and reforms.
Economists already believe that the EFSF needs to be increased anyway. At the moment, the eurozone has agreed to put €440 billion into the fund, but once Greece's bailout has been withdrawn, there won't be enough money to support other ailing economies like Portugal.
A new system, the European Stability Mechanism, will replace the EFSF in 2013.
Italian Prime Minister Silvio Berlusconi said Friday that Italy would speed up its reform programme. He said the new aim is to balance the state budget by 2013, one year earlier than previously planned. The Italian government presented a savings package in July.