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Italy becoming euro zone’s new big headache
As Italy threatens to take over from Greece at the heart of the euro zone debt crisis, European finance ministers have been meeting in Brussels. Weighed down by debt representing nearly 120 percent of the country’s annual economic output, the Italian government’s borrowing costs have risen sharply. But for its partners, a rescue plan is out of the question. “Italy knows very well that – because of the size of the country – it cannot hope for help from outside. That’s the reason for the big reform efforts undertaken right now in Italy,” said the Austrian Finance Minister, Maria Fekter. Among the proposals on the table today, a tax on financial transactions or FTT so dear to France and Germany. But Britain and Sweden remain doggedly opposed. “There is a credibility problem and Europe is running dry in credibility and the solution that is going to be discussed here today, the FTT (financial transactions tax) for example is a non-starter, it is a very efficient way of reducing European growth and it will increase lending costs, the borrowing costs for indebted countries,” said Swedish Finance Minister Anders Borg. Like his Greek counterpart who’s returned to Athens, the Italian finance minister Giulio Tremonti has also gone home to deal with more pressing domestic political crises. Little concrete result is expected from Brussels. euronews correspondent Raquel Garcia-Alvarez, in Brussels, said: “With the Italian risk premium coming close to the same level that made rescue plans necessary in Ireland, Greece and Portugal, there’s no doubt that the discussions on the economic survival of the european union are very much conditioned by what is to happen in the Italian parliament in the next few hours.”