Europe

Italian lower house passes austerity package

Pensioners stand outside the Italian parliament after a demonstration on 15 July 2011 in Rome.
Image caption Protesters have showed their anger at the budget cuts

Italy's lower house has completed parliamentary approval of a tough austerity budget aimed at strengthening the country's public finances.

The Senate had passed the package - including 48bn euros ($67bn; £42bn) in cuts over three years - on Thursday.

Italy has one of the largest public debts in the eurozone, and wants to avoid any need for a bail-out.

Prime Minister Silvio Berlusconi has said Italy is on the front line of the eurozone's economic difficulties.

Italy raised 2.97bn euros ($4.2bn; £2.6bn) through a sale of 15-year government bonds on Thursday, but had to offer a 5.9% rate of return - an all-time high for such bonds.

Benefit cuts

The vote passed the lower house by 314 votes to 280.

BBC Europe editor Gavin Hewitt, in Rome, says both the government and the opposition know that Italy is under fierce scrutiny by the markets because of its large debts.

Earlier this week, the International Monetary Fund (IMF) asked Italy to ensure "decisive implementation" of spending cuts.

In a report, the IMF said Italy must make efforts to reduce public debt, maintain the stability of its financial sector and introduce structural reforms to boost growth.

The measures agreed by parliament include increases in health-care fees, cuts to regional subsidies, family tax benefits and top-level pensions, and public-sector salary freezes.

The government is also looking to raise the retirement age and to privatise state-owned companies.

The package was put to parliament ahead of schedule, amid concerns that Italy may be the next country to be hit by the eurozone's debt crisis.

The left-wing opposition said it was too tough on the least well-off, and voted against it.

Even so, they said they would not delay it with amendments, so as not to prolong uncertainty in the markets.

Italy's Finance Minister Giulio Tremonti hopes it will cut the deficit to zero by 2014 from this year's 3.9% of gross domestic product.

He said in parliament that, without the budget, ''the monster debt from our past will swallow up our future''.

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