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Berlusconi says euro strangling economy Original Source Link: (May no longer be active)
http://www.timesofmalta.com/core/article.php?id=170754http://www.timesofmalta.com/core/article.php?id=170754
Berlusconi says euro strangling economy
Crispian Balmer, Reuters
Italian Prime Minister Silvio Berlusconi has launched a savage attack on the European Union's budget rules, saying the Stability and Growth Pact had to be reformed if the eurozone wanted to see strong growth.
In a hard-hitting column which appeared in yesterday's edition of Il Foglio newspaper, Mr Berlusconi repeated his threat to bring down his government if recalcitrant coalition allies refused to back his plans for income tax cuts in 2005.
Mr Berlusconi said the cuts were needed to revive a lethargic economy, but stressed the strength of the euro currency was also weighing heavily and called on his EU partners to revise the Maastricht Treaty on which the stability pact is based.
"The blessed introduction of the single European currency has thus far produced the exact opposite result of what the euro was created for - an asphyxiated economy and hobbled growth under the burden of 'stupid' ties," Mr Berlusconi wrote.
"In Europe there is an extremely strong drive to review aspects of the rigid ties of the Maastricht Treaty, those perverse factors that have increased the value of our currency above what is necessary and artificially penalised the competitiveness of our industries and our services," he added.
Mr Berlusconi has often railed against the stability pact, but the Il Foglio comments were one of his most virulent attacks to date.
Working on two fronts simultaneously, the Italian prime minister is determined to relax EU restraints on state spending and also introduce his long-promised tax cuts.
Mr Berlusconi's supporters believe the twin move will kick-start the economy and win back voters disillusioned by three years of sluggish growth.
But some of his coalition allies are reluctant to back the tax plan, worried proposed cuts of some six billion euros will push Italy's budget deficit beyond EU limits, or else will involve unpopular cuts to state spending.
Mr Berlusconi insisted in his Il Foglio column that he had found the necessary cover for the fiscal reform and said he would not accept any more delays.
"If taxes are reduced in a consistent and visible fashion, then our journey continues. If not, then the Italians should be called on again so that they can decide their own destiny," he said, making clear he would call elections if necessary.
The prime minister warned last week that without an accord, he would head into early elections only alongside those allies who had backed his tax plan.
Such a split would severely damage those parties that were left outside Mr Berlusconi's umbrella grouping.
The main obstacle to Mr Berlusconi's tax drive is the centrist UDC party, which would prefer to see any spare cash spent on investments and education rather than tax cuts.
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