12 Aug 2011

Italy outlines 'strong' budget cuts

11:11 am on 12 August 2011

Italy's finance minister, Giulio Tremonti, has addressed a special parliamentary session to outline his country's response to the euro zone debt crisis.

Mr Tremonti said government costs are to be cut, state companies privatised and taxes raised on savings, the BBC reports.

The minister said budget cuts next year would be very strong, but queried European Central Bank demands for cuts in public sector salaries and labour law reforms to make firing easier.

He told parliament that Italy needed to reduce its deficit of about 3.9% of national income this year to closer to 1% next year.

Italy's debt is the second highest in the eurozone after Greece at 120% of gross domestic product, but its deficit is among the lowest, meaning its debt is rising at a slower rate.

French President Nicolas Sarkozy and German Chancellor Angela Merkel are to meet next week to discuss euro zone financial governance.