Now Italy’s Coalition Government Is Under Threat From New Austerity Measures


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The Italian government is having problems ahead of approving its new austerity plan, according to Reuters.A senior member of Berlusconi’s coalition government, Guido Crosetto, said that he was fed up with the economic minister’s austerity measures, and accused him of making cuts to every department except for his own.

Crosetto, a former economic spokesman for Berlusconi’s party, took it a step further and said that, “it’s clear that the economy minister just wants to find a way to upset everything and bring down the government.”

Tensions have been rising within Italy’s coalition government for weeks according to The Guardian, in part because of the Northern League pressing Berlusconi for tax cuts even as Italy’s debt-to-GDP ratio continues to rise, set to hit 120% this year.

Italy’s deficit is relatively low in the eurozone, at 4%, but the only eurozone country with a higher stock of debt than Italy’s 120% is Greece. Recently, Moody’s put Italian sovereign debt on downgrade watch because of its weak economic growth outlook and precarious political situation.

The measures on the table in the austerity bill are a freeze on public sector hiring and salary increases until 2014, cuts of €9 billion to the budget over the next four years, and reducing pension spending and spending to Italy’s national health service.

Getting the austerity measures passed is the next big test for Silvio Berlusconi’s government, which has been weakened recently by failing to pass a referendum on nuclear power and by losses in regional elections.  The coalition leaders are meeting Tuesday to debate the austerity measures, and the bill is due to be passed on Thursday.