European Council president welcomes Italian austerity measures

European Council President Herman Van Rompuy Welcomed Italy's latest Austerity Measures

European Council President Herman Van Rompuy Welcomed Italy’s latest Austerity Measures

Herman Van Rompuy, the president of the European Council, has hailed the latest round of austerity measures announced by Italy saying they are “crucial” for eurozone.

Mr. Van Rompuy was speaking on Saturday evening after meeting Italian Prime Minister Silvio Berlusconi in Rome. Italy on Friday had announced further spending cuts and higher taxes for the second time in two months to reduce its budgetary deficit by £40 billion ($64 billion) in the current fiscal, paving the way for a balanced budget by 2013.

“I fully support and welcome the timely and rigorous financial measures. I underlined that these approved measures are crucially important not only for Italy but for the eurozone as a whole,” said Mr. Van Rompuy.

Giulio Tremonti, the Italian finance minister, meanwhile has urged for a more coordinated approach to tackle the EU debt crisis before a key meeting on Tuesday between French President Nicholas Sarkozy and German Chancellor Angela Markel.

The 17 member European Union should start issuing the so-called European bonds, backed by its member states, argued Mr. Tremonti, in order to fund the requirements of the struggling economies.

“We would not have arrived where we are if we had had the euro bond,” said Mr. Tremonti on Saturday.

The idea was however, rejected by German finance minister Wolfgang Schaeuble. A Eurobond underwritten by the stronger economies will essentially weaken the basis for a single currency by making fiscal discipline difficult among member states.

“I rule out euro bonds for as long as member states conduct their own financial policies, and we need differing interest rates so that there are possibilities of incentives and sanctions to force fiscal solidity,” said Mr. Schaeuble in an interview to German magazine Der Spiegel.

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