Strike threats fail to shake Prodi's reform zeal

Italian Prime Minister Romano Prodi stood firm against strike threats yesterday, vowing to drive through market reforms he says are needed to kickstart the economy.

Prof. Prodi's fledging centre-left government on Friday unexpectedly announced a deregulation programme, putting some of Italy's most protected service industries - from lawyers to pharmacists and taxi drivers - on a war footing.

Taxi drivers were the first to announce a national strike with other groups promising to follow, raising the prospect of unrest at the height of Italy's tourist season.

Prof. Prodi, who took power from conservative Silvio Berlusconi in May, said he was open for talks but would not back down.

"We must rework everything to favour the consumer. Italy is a country where costs are too high," he told reporters. "These changes, if they are not carried through while there is still time, will have to be done in a traumatic fashion," he said earlier in an interview with Il Messaggero newspaper.

Prof. Prodi's centre-left is under pressure to shake up Italy's sluggish economy with agencies Standard & Poor's and Fitch saying they will cut Italy's ratings unless they see a realistic strategy to improve competitiveness.

Consumer association Codacons estimated the deregulation would mean average savings for Italians of €500 to €1,000 a year and sweep in a new climate of competition.

It sees an increase in the number of taxi licences nationwide and the release of temporary licences, a move long called for by consumer groups to help loosen the stranglehold the taxi lobby has on its prices.

In other sectors, painkillers can now be sold outside pharmacies and in supermarkets, lawyers are banned from imposing minimum fees, public transport will be able to be run by private companies and insurance companies' fees will be reduced.