EU's Rehn welcomes Italian deficit measures

7th August 2011, Comments 0 comments

EU economic affairs commissioner Olli Rehn welcomed an Italian step to speed up reduction of its public deficit as global financial markets braced for fresh turmoil amid fears Rome needs a bailout.

"It is important that Italy tries to restore confidence to the markets. For this reason, we salute the measures announced to cut its deficit faster," Rehn said in remarks to appear in Monday's Financial Times Deutschland.

Italy, along with fellow eurozone struggler Spain, has come under intense pressure on the markets from investors who increasingly believe that Rome will not be able to stabilise its finances despite tough austerity measures.

On Friday, Prime Minister Silvio Berlusconi said Italy would speed up austerity measures approved last month to achieve a budget balance by 2013, rather than in 2014 as originally planned.

"We are responding to the demands of markets that are governed by no one... and operate independently from economic reality," Berlusconi said, adding: "We have to recognise that the world has entered a global financial crisis."

Rehn told the FTD that he was optimistic that a July 21 summit accord on strengthening EU rescue mechanisms would be in effect by September.

"The technical preparations (to implement the measures) will be completed by the beginning of September at the latest. Parliamentary approval will then follow in September," he said.

"Developments on the markets show that we cannot let the matter drag on," he warned, referring to recent turmoil and what is expected to be a very bumpy day Monday as investors also react to an unprecedented US ratings downgrade.

© 2011 AFP

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