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Visco warns rigidity in business, unions hinder Italy

Economic stagnation serious problem, warns central bank governor

28 March, 14:24
Visco warns rigidity in business, unions hinder Italy (ANSA) - Rome, March 28 - Rigidity in Italian business, labour and the bureaucracy are all serious problems weighing down the national economy, Bank of Italy Governor Ignazio Visco warned Friday.

That's creating a significant problem for growth, leading to economic stagnation, Visco added in comments at a conference at Rome's LUISS university, marking the 100th anniversary of the birth of economist Guido Carli.

Visco noted that Carli, who also served as governor of the central bank from 1960 to 1975, raised similar concerns about bureaucratic barriers to growth at a time when Italy was struggling with the price inflation that shook much of the world during the 1970s. "Rigidity in legislation, bureaucracy, corporations, and unions are always the principal hindrance to development in our country," said Visco. The consequences today "are different from those that were manifested in the 1970s; at that time it was inflation, today, it is stagnation".

Susanna Camusso, secretary-general of Italy's biggest trade union CGIL, said that it seemed Visco was "repeating the same recipes that have already failed".

Raffaele Bonanni, secretary-general of the CISL union, dismissed Visco's words as "nonsense". Meanwhile, Visco urged continued structural reforms in the Italy economy, adding that early signs of economic recovery are encouraging but need to be supported.

"Only by tackling the structural problems that had put the brakes on the Italian economy even before the current crisis...will it be possible to return on the path of a strong and lasting recovery," he said.

Italy's gross domestic product fell by an average of 1.9% last year, but began to recover in the third-quarter and agencies including the IMF forecast growth of 0.6% this year, rising to 1.1% in 2015. GDP fell 2.4% in 2012, according to revised data from national statistical agency Istat.

To boost growth, Premier Matteo Renzi has been announcing a wide range of economic and labour market reforms, including public-spending cuts to free up cash to finance income tax cuts for low-income earners, spending on social programs, and a multibillion euro repayment of bills owed by government to business.

Renzi has also pledged reforms to the Italy's electoral system and has begun the legislative process of eliminating an entire layer of government at the provincial level.