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Italy 'risks slow growth' despite budget package

'We have to count on ourselves', Marcegaglia says

15 September, 13:58
Italy 'risks slow growth' despite budget package (ANSA) - Rome, September 15 - Italy risks seriously low growth without further government action following the approval of its austerity package, the country's largest employer organisation warned on Thursday.

The government won a confidence motion in the lower house of parliament by a margin of 14 votes and then passed the 54-billion-euro budget by the same majority later in the day.

But on Thursday the European Commission, the EU executive, cut its annual growth forecast for Italy to 0.7% for 2011, from 1.1% estimated in May.

According to its latest figures the commission predicted zero growth for the country in the third and fourth quarters. Emma Marcegaglia, the President of Confindustria, said on Thursday the government needed to take further action particularly as the spread between Italian bonds against the German bund was an "enormous problem".

"No help will come, either from eurobonds or anyone else," Marcegaglia said.

"We have to count on ourselves and make these reforms that have been put aside for too many years or the responsibilities of the government will be very serious".

Hundreds of demonstrators protested outside parliament late Wednesday as the country's lawmakers voted in favour of the austerity package, the second in the past three months.

The demonstrators let off firecrackers and clashed with riot police on the streets of Rome in a protest against the tax increases and spending cuts contained in the package.

The controversial budget measures include an increase in value added tax (VAT) from 20% to 21%, a 3% levy on incomes above 300,000 euros and a crackdown on tax evasion.

The package also pledges to halve the number of provincial councils and to merge small town councils with fewer than 1,000 inhabitants in a bid to balance the budget by 2013.

The measures were delayed by weeks of opposition as Berlusconi's ruling People of Freedom party sought a compromise with its Northern League coalition partner and trade unions.

Pier Luigi Bersani, head of the opposition Democratic Party, said far more was needed than the government's measures to promote economic growth in Italy.

"I believe we are at a point where it's not useful to speak about single measures," he said. "We have to find a key policy to get going again and we have to be serious about it".

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