Italy's new Prime Minister Enrico Letta said today his coalition government would act fast to reverse an austerity policy he argued was killing Italy and called on Europe to become a motor for growth.
"Italy is dying from austerity alone. Growth policies cannot wait," Letta said during his inaugural speech to parliament, under the watchful gaze of European partners.
The leftist moderate, who was sworn in with his cabinet yesterday, promised to have results in 18 months or "take the consequences."
He said the economic situation in Italy -- one of the first countries to fall prey to the eurozone debt crisis -- "is still serious" and its USD 2.6 trillion debt "weighs heavily" on ordinary Italians.
But he also looked to Europe, saying it was suffering from "a crisis of legitimacy and ... Must become once more a motor of sustainable growth" -- a reference to his aim to persuade Europe to reverse its disputed austerity policy.
The 46-year-old moderate from the centre-left Democratic Party said he wants to deal quickly with the social fallout of the longest economic slump in 20 years by tackling a jobless rate of 11.6 per cent and regulating temporary job contracts.
He also said a controversial housing tax imposed by Monti would be suspended from June -- though he did not mention the refund former premier Silvio Berlusconi had been pushing hard for.
Letta, a Catholic, promised to renew confidence in the country's scandal-hit political class and clean up a society dogged by corruption, saying he was "aiming big, just as Pope Francis has told us to do."
Investors appeared buoyed by the new leadership, with Italy performing well at its first market test, paying significantly lower rates to raise USD 4.58 billion at a five and ten-year bond auction.
However, official figures today showed that business confidence dropped sharply this month and the shooting of two policemen by an unemployed man outside government headquarters yesterday showed that social desperation was not far from the surface.
Letta said the political class had to react to the growing anti-establishment voice in Italy, which was driven by anger over politicians' perks at a time of widespread financial difficulties.
The government's first act would be to cut the salaries of ministers who are also members of parliament, and are therefore currently eligible for two salaries, he said.
The markets reacted favourably to Letta's speech, with Milan stocks up around two per cent afterwards.
