13 Nov 2011

Austerity measures approved in Italy

10:05 am on 13 November 2011

The lower house of parliament in Italy has passed stringent economic reforms demanded by the EU to restore confidence in the country's economy. The vote was 380 - 26.

The vote on Saturday paved the way for Silvio Berlusconi to resign as prime minister.

He lost his parliamentary majority in a vote on Tuesday and promised to resign after the austerity measures were passed by both houses of parliament.

The measures were earlier passed by the senate on Friday.

They include a rise in VAT and fuel prices, a freeze on public-sector salaries until 2014, an increase in the pension age from 65 to 67 and the sale of state assets.

The BBC reports Italy's leaders are desperate to signal that they can bring the country's finances under control.

An EU team is already at work work in Rome, monitoring how Italy plans to cut its debt, which is 120% of annual economic output (GDP).

The economy has grown at an average of 0.75% per year over the past 15 years.