Berlusconi: Italy’s Austerity Plan Gains Approval

Posted August 13th, 2011 at 3:25 pm (UTC-5)
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Italy's prime minister says his government's latest plan to slash spending and raise taxes is winning approval from other top European officials.

Silvio Berlusconi told Italian news agencies Saturday he has spoken with German Chancellor Angela Merkel and European Central Bank President Jean-Claude Trichet, and that both said they appreciated the Italian plan.

Mr. Berlusconi's Cabinet approved approximately $63 billion in austerity measures Friday. The measures cut $28 billion from the country's budget next year and $35 billion in 2013.

Supporters say the combination of cuts and tax hikes will balance Italy's budget by 2013, in line with requests from the European Central Bank.

Italian officials are hoping the austerity plan will calm investors' fears that Italy might become the next victim of the European debt crisis.

The austerity measures take effect immediately but will still need to be approved by parliament within 60 days. Top officials said Saturday they are confident that lawmakers in Rome will give the cuts the final go-ahead.

Critics in Italy and some regional leaders have voiced opposition to the cuts, saying they will hurt the poor.

Concerns about Italy's financial future caused interest rates on the nation's bonds to soar last week. Developments in Italy also played a role in the recent worldwide economic uncertainty that has resulted in highly volatile trading in all financial markets.

European stock indexes soared on Friday for the second straight day, with key exchanges in Britain, France and Germany gaining more than 3 percent.

U.S. markets also advanced at the end of a volatile week that saw trading indexes plummet and soar on alternate days. Asian indexes finished the week mixed.