It was recently announced by the Italian Prime Minister that Italy will be implementing a new plan of action to begin mending it’s economy.Berlusconi admits that the measures taken will be gruelling but necessary. He predicts that the country’s budget will balance in aproximately two years as a result of this new plan.
The European Central Bank declared that it would buy Italy’s debt earlier this week which has resulted in the reduced cost of borrowing. This has spurred Italy on to come up with a fool proof plan to balance it’s budget.
The plan aims to cut 20bn euros in spending by 2012 and a further 25bn euros by the following year. In order to achieve this, the government plans to cut 50,000 jobs and switch any weekday bank holidays to the weekends in order to maximise the number of working days in the year. In addition, higher earners will recieve an increase in taxes and tax on dividens will increase by 7%. Parliament has yet to approve the plan however, they will need to weigh up the possible negetive affects such as reduced consumer spending against the probability of the measures leading to a reduction in the deficit. They have 60 days to make a decision.
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