The answer to “Il sole 24 Ore”, Italy’s leading business daily,on how the markets would react to Mario Monti’s 30 billion euro austerity package, has certainly proved to be a welcoming one. The spread between German and Italian 10 years bonds fell by 30 basis points on the 5th of december and Milan’s Ftse Mib jumped 2.5 per cent to 15,861.99 after the “Save Italy” decree was successfully approved by the cabinet.
On a political level although Angelino Alfano, the new Pdl party leader couldn’t hide his satisfaction on his Facebook page for the caution shown by Monti and his team in leaving the Irpef (individual income tax) untouched, the former majority group is visibly divided on the decisions taken by the new government. While Emma Marcegaglia the president of Confindustria (Italy’s confederation of industry) has said that the measures are tough but necessary, Susanna Camusso the president of CGIL, Italy’s largest labor union has criticised the pension reform, that ,she stressed – will harm pensioners’ income.
According to the economist Nouriel Roubini, the fiscal adjsutment is significant but as his twitter page states “the key issue in Italy is what will restore growth?,given that the additional fiscal asuterity and higher taxes will make the recession even more severe”.In other terms large financial support mainly by the International Monetary Fund and the European Central Bank will still be necessary.A view also shared by leading economists and commentators.
But in a Republican regime, the harshest of the judgements lies in the hands of the people. According to a poll by “La Repubblica” (italian national daily newspaper) earlier this week, Italians were asked to answer on weather they liked Monti’s new austerity measures, the majority didn’t seem to approve his proposals. If we take into account a second poll that focuses on each of these points it seems that the more popular changes concern those issues that had been at the centre of the public discontent during Berlusconi’s last years in power. In particular a great sense of relief comes from the reduction of local government spending,tax on luxury items and most of all significant cuts in the cost of politics.
Monti himself has publicly announced to renounce his salary, something that mirrors what has happened in another recession-striken country like the Uk where Prime Minister David Cameron has been recently pursuing a“low cost” lifestyle.A radical new approach that naturally marks a sharp distance between this government and his most recent political legacy.
On a similar position (although the question was asked differently) the readers of “ il Sole 24 Ore.com” . According to a poll published on the webiste the majority of Italians (42.68 % ) think the package is heavy but indispensabile wheareas over the 35% is against the measures that will not provide growth.
The idea of “sacrifices” which can be accounted as the core principle of the whole package as well as the remedy to seek in order to save the euro is probably best represented by the pensions reform, the least popular of all measures.It seems that Italians don’t have much alternative but to swallow the pill regardless of how bitter it might be. The duration of this government mainly formed by technocrats depends on its ability to bring Italy out of the crisis.We’ll have to wait until well after the Eu meeting next Friday to see if the plan will work to restore Italy’s international and financial credibility. But one could argue that one thing is the political agenda and another is how people really live and think of themselves.It will probably take quite a while before Italians can restore their awarness as individuals who live in a country that despite its dysfunctional institutions it’s the eighth largest economy in the world, with a highly educated population and unparalleled cultural diversity.