Bank chief: Italy's economy risks a "vicious circle" of weak growth and lack of confidence
Warning comes as unemployment rose to its highest level for 13 years
Italy’s economy risks a “vicious circle” of weak growth and lack of confidence, the governor of the Bank of Italy has warned as unemployment rose to its highest level for 13 years while its recession deepened.
More than 35 per cent of young Italians are out of work as factory closures, bankruptcies and public sector cuts fuel a nationwide backlash against the austerity policies of Mario Monti’s technocrat government ahead of general elections early next year.
Speaking at a banking conference in Rome, Ignazio Visco, central bank governor, praised Mr Monti’s structural reforms for having “stopped the loss” of market confidence in Italy. With an eye to whoever forms the next government, he said budget targets must be respected and reforms implemented.
Nonetheless, Mr Visco warned of difficult times ahead, with reforms only having an impact in the “medium term” and the government planning further austerity measures to finance a public debt of €2tn – or 126 per cent, second only to Greece in the eurozone as a percentage of economic output.
“There is the risk of a vicious circle – little growth and falling savings, families feel uncertain and growth drags