Milan

Employers' chief sees 'chink of light'

Squinzi douses economy minister's optimism

Employers' chief sees 'chink of light'

(By Christopher Livesay) Milan, July 8 - The chief of Italian industry federation Confindustria on Monday threw a wet blanket on optimism expressed by Italian Economy Minister Fabrizio Saccomanni, claiming no end was in sight for the prolonged recession in Italy. "We have been in recession for nine straight quarters. We don't see the light at the end of the tunnel, despite the optimistic declarations of Minister Saccomanni," said Giorgio Squinzi, addressing a conference organized by construction operators called. Last week Saccomanni said "I think I'm the only one who continues to see a the small light deep in the tunnel...and I do not think it is the train that is coming towards us". Squinzi said the light at the end of the tunnel was just "a flicker, not determined by us, by the way, but by the international economic situation". Italy is currently living through its worst recession in two decades. But some glimmers of hope have recently surfaced. Last week the European Commission decided to allow more budget flexibility for countries like Italy keeping the deficit below the European Union's ceiling of 3% of GDP in order to boost growth. Premier Enrico Letta, who was sworn in on April 28 at the helm of a broad left-right coalition government, has vowed to boost growth while maintaining the deficit below the EU's ceiling as the country, the eurozone's third-biggest economy, is struggling with its longest recession in over two decades. Italy is expected to contract 1.8% in 2013, according to the Organization for Economic Cooperation and Development. The country's declining growth has been linked to a massive round of austerity cuts brought about during the last administration of Mario Monti in order to curb Italy's skyrocketing borrowing costs amid the euro crisis. Rising unemployment was also an unintended consequence, with 12.2% of the workforce - over three million people - currently out of a job, the highest since the current method of evaluation began. For youth the situation is even more dire, with nearly 40% of those under 25 out of work. Following the EC decision last week Saccomanni said the added budget flexibility "rewards the work done over the last months and wipes away the skepticism of some". He added that Italy was on target to "balance its budget in structural terms" in 2013. A country is considered to have balanced its budget in structural terms if government revenues match expenditure when the data is adjusted to take account of fluctuations in the business cycle. "This is the most serious crisis since the end of World War II, but the first signs of stabilization are starting to appear," Saccomanni said. The economy minister stressed that efforts must continue if the country is to "achieve the reversal of recessionary trends in the second half of the year". Italy is expected to have a budget-deficit-to-GDP ratio of 2.9% in 2013.

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