Italian PM Monti to lobby parliament for €30-bn spending cuts

Italy's new prime minister Mario Monti is expected to lobby parliament to support a €30-billion package of austerity and growth measures to cut the euro-region's second- biggest debt and prevent Italy from precipitating the euro's breakup.

Monti would present the plan to the chamber of deputies in Rome followed by the senate at 6 pm after the package was approved by his cabinet yesterday, a day ahead of schedule. The package, which includes cuts exceeding €12 billion to spending, would force workers to delay retirement, resurrect a tax on first homes, crack down on tax evasion and throw open closed professions.

Monti, who was sworn in as prime minister on 16 November following the resignation of Silvio Berlusconi, is under pressure for swift action as a selloff of the country's bonds saw borrowing costs surge last month past the 7 per cent threshold that led Greece, Ireland and Portugal to seek aid. Italy is seen as too big to bail out with €500 billion of bonds maturing in the next three years, more than the current size of the EU rescue fund.

Meanwhile, the yield on Italy's 10-year bond was down 29 basis points at 6.395, the lowest in a month, which narrowed the gap with German bonds top 424 basis points. The FTSE MIB index was up gaining most among Europe's benchmarks, adding 1.8 per cent.

According to analysts, the budget package comes as a crucial week for Europe's efforts to end the debt crisis starts to prevent Italy and Spain from falling over the brink and causing a breakup of the single currency.

German chancellor Angela Merkel meets with French president Nicolas Sarkozy tomorrow in a bid to advance the plan for stricter enforcement of the region's deficit rules that European Leaders would be presented, at a summit on 9 December.