Europe

Italy's Monti opens election campaign with tax pledge

Mario Monti in Venice, 29 December 2012
Image caption Mario Monti has been leading a technocratic government

The Italian caretaker Prime Minister, Mario Monti, has promised to cut labour taxes in an interview seen as the launch of his election campaign.

Mr Monti, who leads a centrist coalition while not standing as a candidate himself, also attacked conservative rival Silvio Berlusconi.

In office he vowed to restore market confidence in Italy's finances.

Wednesday saw him achieve his aim of halving the difference between Italy's and Germany's bond yields.

These indicate a country's cost of borrowing and reflect how nervous investors feel about lending to them. Germany is used as a benchmark as it is considered the safest bet in the eurozone.

The difference between Italy and Germany's yields dipped below 2.87 percentage points on Wednesday.

When Mr Monti took office as head of a technocratic government in November 2011, the spread had stood at 5.74 percentage points.

Mr Monti's centrist allies are in a three-way race with Mr Berlusconi's People of Freedom party on the right and the Democratic Party on the left.

'No comment'

Speaking on radio, Mr Monti pledged to take measures to redistribute wealth in the country.

"We need to reduce taxes on the labour force, both on workers and companies, by cutting spending," he said.

He defended his administration's record, saying that the "light at the end of the tunnel" was "much nearer".

Since withdrawing his party's support for the government in December, Mr Berlusconi has repeatedly launched attacks against the former European commissioner.

"Berlusconi has made improper attacks against me - on areas like family values," Mr Monti said on Wednesday.

"I think I need make no further comment," he added, in an apparent reference to the string of sex scandals involving the veteran billionaire politician.

Mr Monti, a former economics professor, was chosen to impose financial rigour on the economy, after Mr Berlusconi quit the prime minister's job.

In power, Mr Monti made some progress early on, including raising the retirement age and structural reforms.

However ordinary Italians have been hard hit by the combination of tax rises and spending cuts he imposed to repair Italy's public finances.

Italians are due to go to the polls over the weekend of 24-25 February.