Prime Minister Mario Monti’s Cabinet is set to approve a decree law to ease Italian bureaucracy and boost productivity as he tries to revamp Europe’s fourth-biggest economy to fend off fallout from the region’s debt crisis.
The package, Monti’s third legislative effort since taking office on Nov. 16, seeks to abolish hundreds of laws and simplify rules regulating companies and new businesses. The Cabinet is set to pass the package today at a meeting that started at 9:30 a.m. Rome time.
“No doubt the decree will facilitate the smooth functioning of a number of now cumbersome procedures, contributing to the modernization of the Italian economy,” said Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc in London. “It does not solve any of the structural weakness of the economy but it will help the other more substantial reforms in Monti’s agenda to have a better grip.”
Monti pushed through budget cuts worth 20 billion euros ($26 billion) in December, including higher levies on fuel and a tax on primary homes, in a bid to convince investors Italy can tame the euro-region’s second-biggest debt and curb record borrowing costs. To counter the austerity, the government last week passed a second plan aimed at boosting competition and growth by opening Italy’s so-called closed professions, including notaries, lawyers and taxi drivers.
The government has also started talks with unions and employers aimed at overhauling the country’s rigid labor laws, the last pillar of Monti’s plans to remake the 1.6 trillion-euro economy. Labor Minister Elsa Fornero said this week that she hopes to have an agreement within a month.
The new plan comes as many Italians are rejecting Monti’s calls for shared sacrifices now to spur future prosperity. A wildcat strike by truck drivers this week has clogged traffic on Italian highways, forcing Fiat SpA to halt car production and leaving some cities short of gasoline and food.
Public transport workers and some airport and airline staff are striking today, disrupting travel across Italy. The 24-hour strike wrecked havoc on transport on buses and trains while Rome’s two metro lines and local commuter trains were shut down, ATAC, the company that runs them, said in a statement on its website.
Italy’s 10-year yield fell to 5.96 percent at 11:11 a.m. Rome time, the lowest in more than two months and down 9 basis points from yesterday. The premium investors demand to hold Italian 10-year bonds instead of benchmark German bunds was at 408 basis points, the lowest since Oct. 31.
Italy sold 11 billion euros of Treasury bills today, meeting its target, and borrowing costs plunged from the previous sale as Italy benefits from the European Central Bank’s efforts to fight the debt crisis. The Frankfurt-based ECB loaned euro-region banks a record 489 billion euros for three years on Dec. 21 to avert a credit crunch and has bought 217 billion euros of government bonds since May.
While Monti’s measures may have helped shore up investor confidence in Italian debt, the budget cuts and higher taxes are deepening the economic slump in a country where growth has lagged behind the euro-region average for more than a decade. The International Monetary Fund forecast on Jan. 24 that the economy will shrink 2.2 percent this year, compared with a 0.5 percent contraction for the euro area.
To contact the editor responsible for this story: Jerrold Colten at email@example.com