Berlusconi ally says must cut taxes, end austerity

Tue Dec 18, 2012 6:34am EST
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By James Mackenzie and Gavin Jones

ROME (Reuters) - The next Italian government must cut taxes and shun German-inspired austerity policies which have dragged the country into recession, the main economics spokesman in Silvio Berlusconi's center-right party said.

Renato Brunetta, an economics professor and former minister of public administration, said a center-right government should rely on steps such as structural reforms and privatizations to tackle Italy's debt mountain.

Brunetta has been one of the leading critics of Prime Minister Mario Monti in the People of Freedom (PDL) party and a chief influence behind Berlusconi's attacks on his "Germano-centric" technocrat government.

"Putting our heads down and carrying on like this with a blood, sweat and tears economic policy designed by (German Chancellor) Angela Merkel doesn't help anyone," he told Reuters. "It's time to finish with it, it's a failed policy."

With elections due in February, ministers and officials including Monti have declared that any future Italian government would be bound to stick to the pledges his government has made to cut the budget deficit and rein in public finances.

But to a striking extent, Brunetta's comments echo his counterpart in the center-left Democratic Party (PD), Stefano Fassina, and underline broad agreement in large areas of Italian politics that the austerity policies of Monti's technocrat government must be modified.

Brunetta said Monti, appointed last year to stem a widening financial crisis, had essentially continued the tight budget policies already followed by Berlusconi's last government, which passed two emergency budgets worth a total 60 billion euros.

But he said Monti, who added a further 20 billion euros of tax hikes and spending cuts, had made three big mistakes which had deepened a recession expected to see the economy shrink by 2.4 percent this year.   Continued...

Italian Minister for Public Administration Renato Brunetta speaks during a news conference at Chigi palace in Rome June 10, 2010. REUTERS/Max Rossi