Brussels

Italian households hit hardest by euro crisis

EC study says number of those suffering up 15%

Italian households hit hardest by euro crisis

Brussels, March 26 - Italy suffered the brunt of the eurozone debt crisis in 2012, a European Commission report said Tuesday as a series of studies were issued on the good - but mostly the bad - about the recession-plagued Italian economy. "Economic stress had repercussions in Bulgaria, Cyprus, Ireland, Portugal, Greece, Spain and especially Italy, where the number of those in economic difficulty rose by 15%," said the EC in its report on employment in Europe. The study also stressed that Italy lagged behind the rest of Europe in productivity, "down 2.8% in the last quarter of 2012, following an even bigger 3% drop in the previous quarter". "Italy is also the country, among the largest in Europe, where unemployment in the last quarter of 2012 underwent the fastest climb at 0.5%, followed by Poland at 0.3%, Spain and France both at 0.1%," the study said. Meanwhile the Italian government said that unemployment is getting worse in Italy but lower borrowing costs have reduced interest payments on the public debt. Details from the government's most recent economic and finance report, including updated economic forecasts, were released in advance of its final submission to Parliament before April 10. The report, known as the DEF, projects that by next year, the Italian jobless rate will rise as high as 11.8%, above earlier estimates of 11.4% and the rate of 11.7% recorded in January. Unemployment has been climbing dramatically: in 2012, Italy's national unemployment rate was 10.7%, up from 8.4% in 2011. However, the outgoing government of Premier Mario Monti says it has saved 5.3 billion euros in interest costs by boosting international confidence in the Italian economy. Interest payments on Italian government bonds will amount of 83.9 billion euros in 2013, below earlier estimates that 2013 interest costs would hit 89.2 billion euros, according to the document. That's also below the 86.7 billion euros paid in interest on Italian paper in 2012. But given that the uncertainty surrounding the next Italian government and the outlook for the economy, interest rates are again rising and that means Italian payments will jump to 90.3 billion euros in 2014, according to the new estimates. No government has yet been established following general elections one month ago. Pier Liugi Bersani, leader of the Democratic Party, has been given until Thursday to try to pull together a national government, since no one party gained a majority in the two houses of Parliament. The DEF also includes the Monti government's plan to pay over two years about 40 billion euros' worth of bills to Italian public administration suppliers, even though this will boost the country's deficit. Monti maintains that the European Commission is not opposed to the notion, even though it could boost the deficit beyond levels previously agreed to by EU states. His government argues that the payments will provide much-needed economic stimulus to Italy's recession-hit economy, although it would raise Italy's 2013 budget deficit to 2.9%. The Italian government has been working with the EC to try to make the payments, while remaining in line with deficit regulations. Meanwhile, the new economic estimates say that the tax burden on Italians will reach 44.4%, slightly below previous forecasts of 45.3% - both well above the 2011 average of 42.6%. Reflecting the country's ageing population, pension spending is forecast to reach 5.7 billion euros this year, 16.2% of Italy's GDP. That represents a small increase from the 15.9% of GDP in 2012 spending, but the proportion is expected to remain stable in 2014.

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