Tags: Berlin | Italy | Rescue | Fund

Berlin: Italy Is Too Big for a Rescue Fund

Sunday, 07 Aug 2011 11:41 AM

Sentiment is growing in the German government that Europe cannot bail out Italy because its economy is just too big and will require more aid than anyone can handle, German weekly Der Spiegel reports.

The $625 billion European Financial Stability Facility (EFSF) can help smaller countries only, the publication says, as reported by the AFP newswire.

"The weekly said the German government is insisting that Italy resolve its debt problems on its own and that the EFSF is intended only to rescue smaller economies within the eurozone," the AFP reports.

"Italy has been battered on the stock and bond markets in recent weeks by investors concerned about its high public debt and anemic growth, as well as signs of tensions within Prime Minister Silvio Berlusconi's center-right coalition."

The EFSF has assisted Ireland, Portugal and will soon help Greece.

Italy, meanwhile, has said it will eliminate its deficits by 2013 by hastening austerity plans.

"We are facing a very difficult situation in financial markets that requires a coordinated intervention by various states, above all the nations that share the euro," Berlusconi says, according to Bloomberg.

Budget-cutting austerity measures will be painful, analysts say.

"The budget balancing rule is merely a device to impose on Italy pretty large and painful primary surpluses for many years to come," says Vladimir Pillonca, an economist at Societe Generale in London, Bloomberg reports.

Italy carries a 120 percent debt-to-GDP ratio, among the highest in Europe, while growth remains sluggish.

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Sentiment is growing in the German government that Europe cannot bail out Italy because its economy is just too big and will require more aid than anyone can handle, German weekly Der Spiegel reports. The $625 billion European Financial Stability Facility (EFSF) can help...
Berlin,Italy,Rescue,Fund
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2011-41-07
Sunday, 07 Aug 2011 11:41 AM
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