Italy does not require more budget cuts

Italy will not need any more austerity budget cuts even if its current recession lasts, Prime Minister Mario Monti told Italian finance chiefs in a speech in Milan yesterday.

“If the recessions lasts, if the real economy does not improve, there will be no need for a new plan since safety margins have been included” in the latest austerity budget approved in December, Prof. Monti said.

Italy is aiming to restore a balanced public budget by 2013.

“We have been prudent,” Prof. Monti said, adding that that growth figures incorporated into this plan were “very modest” and borrowing costs were “very high” even though they jitters on financial markets have since fallen.

Prof. Monti said there would also be extra revenue flowing into state coffers from a crackdown on tax evasion which had not been included inthe budget.

The government is forecasting the economy will shrink 0.4 per cent this year.