Europe

Jitters over Berlusconi's management of economy

A package of austerity measures worth more than 50bn euros (£43bn; $68bn) is about to be approved by the Italian parliament.

Prime Minister Silvio Berlusconi says he is determined to balance the budget by 2013 - but do not think for a minute that it is all under control.

Italy and its huge sovereign debt are still the focus of huge concern across the eurozone and beyond.

And the markets remain jittery. The yields on five-year Italian bonds in an auction on Tuesday hit their highest levels since the introduction of the single currency a decade ago.

So what next?

Cherished perks

Whatever his critics may say about him, Mr Berlusconi clearly knows what ails the Italian economy.

"We are determined that measures to consolidate the budget will be accompanied by measures linked to growth and development," he said on a whistle-stop trip to Brussels on Tuesday.

"And we will intervene against what in some cases is a true bureaucratic oppression in our country."

But promising change and implementing it - as we have seen in Greece and elsewhere - are two different things.

If solving Italy's problems was just a matter of a few more taxes here and a few more cuts there, the situation would not be quite so precarious.

But this is about changing the way the Italian economy has operated for decades, and there is substantial resistance to reform.

Political interest groups - including politicians themselves - do not want to give up the perks and easy influence to which they have become accustomed.

And some trade unions are threatening a winter of discontent, arguing that the burden of the government's austerity plans falls mainly on the poor.

"This is just putting a greater strain on the people who can least afford it," said Leopoldo Tartaglia of the CGIL union.

"There's no plan for growth, no plan to give young people without jobs a proper perspective for the future."

The government insists otherwise, but confidence in its ability to navigate out of this crisis has been shaken by the haphazard manner in which the austerity measures were introduced.

Wild card

Political infighting meant the package was changed significantly four times before it was put before parliament last week.

"Italians usually wait until the last minute to address problems and solve them," said Fiorella Kostoris, an economics professor at the University of Rome.

"And we're now at the last minute."

"I'm pessimistic about the depth of our structural economic challenges," she added, "but I'm optimistic that people know they have to be tackled."

Much may depend on the political future of the prime minister himself.

Mr Berlusconi's opponents say he timed his trip to Brussels and Strasbourg this week deliberately, to avoid an appointment with magistrates investigating sex and blackmail scandals back home.

Whether that is true or not, it highlights another disconcerting element in Italy's current travails.

If this were just an economic crisis - of debt and a lack of growth - the outcome might be just a little easier to predict.

But politics is in turmoil too.

The never-ending whiff of scandal surrounding the prime minister is the wild card in all this - something that could suddenly knock the best-laid recovery plans right off course.

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