Italian budget in home stretch, unions on warpath

Sun Dec 18, 2011 5:34pm EST
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By Philip Pullella

ROME (Reuters) - Italy's austerity budget, vital to get Rome's accounts in order and help save the euro from collapse, enters its final stretch this week, with unions still mounting roadblocks to its path.

The 33 billion euro ($43 billion) package of cost cuts and new taxes was passed by the Chamber of Deputies on Friday after Prime Minister Mario Monti's one-month-old government won a confidence vote earlier in the day.

It has now moved from the lower house to the Senate, whose leader Renato Schifani promised on Sunday that it would go through before Christmas. Most observers expect it to be definitively approved on December 23.

Industry Minister Corrado Passera said later that the new government had no plans to introduce a second round of austerity, contradicting Giulio Tremonti - finance minister until November - who said more was very likely.

The measures, which have been hailed by Italy's European Union partners, will cut public spending, raise taxes and reform pensions in a bid to restore market confidence in the country's finances and balance its budget by 2013.

The collapse of investor confidence during the summer under Silvio Berlusconi's administration thrust Italy to the centre of the euro zone debt crisis, and pushed its borrowing costs to untenable levels on bond markets.

The austerity plan, challenged by unions and the opposition Northern League, has been in effect since Monti's government approved it on December 4, but needs full parliamentary approval within 60 days.

Labor Minister Elsa Forneo, who like all members of the Monti government is technocrat and not a politician, served notice to the unions that they would have to be flexible.   Continued...