Wednesday, July 13, 2011

Italy's borrowing costs soar as economy teeters on the brink

Italy's borrowing costs soared to their highest level in over a decade amid highly volatile trading as market contagion from Greece forced Silvio Berlusconi to appeal for national unity and "sacrifices" to cut the nation's debt mountain.

"We are in the front line of this battle," Mr Berlusconi said, describing a crisis that threatened all of Europe and the future of its common currency.

The Italian prime minister's appeal -- the most sombre in his three years in charge of his centre-right government -- was intended to rebut widespread criticism in the Italian media and the markets that his coalition was rudderless and divided by disputes between him and Giulio Tremonti, finance minister.

"We have to eliminate any doubts over the efficacy and credibility of our budget," Mr Berlusconi said, insisting that the €40bn package would eliminate Italy's budget deficit by 2014.

Opposition party leaders in Rome pledged their co-operation in parliament to pass the government's three-year austerity programme by Friday in time for a possible emergency summit of EU leaders in Brussels that day.

"This would be a record in Italian history," Enrico Letta of the opposition Democrats told the Financial Times. "Never before has a budget been passed in five days." (read more)