Stock markets across Europe regained some poise on Thursday after Italy’s new leader survived a make-or-break vote on his austerity plan and investors snapped up bank shares after emergency funds for the financial system were made available.
Italian Prime Minister Mario Monti’s decision to link an Italian senate vote on his 33 billion euro (US$43.1 billion) budget package to a vote of confidence risked plunging the country into fresh political chaos. However, he managed to get the plan approved and will now set about balancing Italy’s budget by 2013.
The program includes higher value-added tax rates, a local housing tax, health spending cuts, an increase in the state pension age to 66 and a higher retirement age. Trade unions said the burden would fall heavily on the poorest in Italian society.
Meanwhile, there were signs of growing discontent in Greece, where hearse owners became the latest to demonstrate their grievances, by staging protest drives through the country’s two main cities. They are worried that a sharp rise in annual road taxes could put them out of business. The -protesters say their cars have been reclassified as private instead of business vehicles, which means they will pay up to six times more in road tax.
“How can you call a hearse a regular car? Our passengers are deceased,” said protester Aris Karvounidis, a member of the Funeral Services Association of Northern Greece.
However, the tone was somewhat more upbeat on financial markets, where the FTSE 100 in London added 1.3 percent, France’s CAC40 gained 1.4 percent and Germany’s DAX rose 1.1 percent. Banking stocks were in demand as investors reassessed the strong take-up of loans from the European Central Bank on Wednesday as at least providing some liquidity, even if it did highlight the precarious state of the financial sector.