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Italy to spend 1.5bn euros to boost youth employment

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Image caption Forty percent of youth in Italy are without jobs

Italy's government has announced it will spend 1.5bn euros ($2bn; £1.2bn) to try to boost youth employment.

The funds include tax breaks for companies that hire people aged 18-29, and will target the country's deprived southern areas.

Two in five young Italians are out of a job, while the national unemployment rate is about 12%.

The measures were unveiled on the eve of a European Union summit in Brussels on youth joblessness.

Prime Minister Enrico Letta said that the money aimed to get at least 200,000 young Italians into the workforce by aiding those with temporary contracts as well as boosting training and school-leaver schemes.

'Bridge to recovery'

In addition to the measures to boost youth employment, the Italian government also said it would delay a planned rise in value-added-tax (VAT), which will cost it an additional 1bn euros.

Mr Letta's predecessor, Mario Monti, had announced the VAT increase in 2011 in an attempt to improve investor confidence in the government's capability to repay its debts.

The proposed VAT freeze must be approved by parliament first.

"These are all measures that will help consumer spending in the short term... and a bridge to economic recovery," said Economy Minister Fabrizio Saccomanni, adding that Italy was "fully committed" to keeping the government deficit below 3% of GDP this year, as required under EU rules.

Italy's economy shrank by a worse-than-expected 0.6% in the first quarter of this year.

Across Europe, 5.6 million young people are out of work, with a jobless rate of 23%. In Greece and Spain, the rate of youth unemployment is around 50%.

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