Italian Prime Minister Mario Monti met party leaders on Saturday to drum up support for new measures designed to shore up public finances, helping growth and calming the debt crisis in the eurozone’s third-largest economy.
His Cabinet is scheduled to approve the package of reforms today, a step widely seen as vital for re-establishing Italy’s shattered credibility with financial markets after a series of unfulfilled promises by the previous government.
The plan will then be outlined at two news conferences — one with foreign reporters — and presented in both houses of parliament.
Italy has been at the center of Europe’s debt crisis since yields on its 10-year bonds shot up to about 7 percent, similar to levels seen when countries like Greece and Ireland were forced to seek a bailout.
Government sources familiar with the planned reforms say the mix of cuts and tax rises will total about 20 billion to 25 billion euros (US$26.8 billion to US$33.5 billion) over the next two years, about half of which will be used to reduce the budget deficit and help balance the budget by 2013 despite the economic downturn and rising borrowing costs.
The rest will free up resources to try to regenerate Italy’s recession--bound economy.
Pier Ferdinando Casini, head of the centrist Union of the Center party, said after meeting Monti that the measures would be severe but hopefully also fair.
“When the doctor arrives, it’s difficult to prescribe nice medicine. Medicine is always bitter, but sometimes inevitable to prevent the patient dying,” he told a news conference.
Angelino Alfano, secretary of former Italian prime minister -Silvio Berlusconi’s PDL party, urged Monti to ensure the cuts did not fall heavily on people who have always shouldered the burden and to show special consideration for families.
The plan is expected to include an increase in the retirement age for many workers, liberalize professional services, increase income tax in higher income brackets and introduce new taxes on private assets and luxury goods.
However, it has not yet fully convinced the center-left Democratic Party’s leader Pier Luigi Bersani, who said groups like low earners and pensioners needed greater protection and that measures to fight tax evasion were insufficient.
Monti was to have met unions and local authorities yesterday to try to reach a broad consensus on the plan. He has said fairness is one of the key priorities of his reforms, but unions are grumbling about possible pension and labor market changes.
Susanna Camusso, secretary of Italy’s biggest union CGIL, said she was struggling to see signs of equity in the plan, based on what she knew so far from reports, but would wait until after speaking to Mont to make her judgment.
“We are ready to support the right decisions but also determined to oppose those we consider wrong,” she said at a union meeting on Saturday.
Monti will have to balance the competing needs of showing budget rigor, while not choking off growth, without which it will be impossible to reduce a debt mountain equivalent to 120 percent of GDP.
Changes to pensions will be key in the new reform plan, with eligibility requirements toughened up for so-called seniority pensions which are based on a combination of workers’ age and the years for which they have paid contributions.
Programmed cuts to the national health service budget are expected to be accelerated by one year, to reduce spending by 2.5 billion euros next year and 5 billion euros from 2013, a local government source said.
A local housing tax might also be reintroduced, bringing in estimated revenue of at least 3.5 billion euros a year.
Other expected measures include further increases in value added tax rates and a ban on cash transactions above 500 euros in an effort to tackle tax evasion.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by