Italy’s new government wins 1st confidence vote

Italy’s new government easily passed its first confirmation vote Monday in Parliament after Premier Enrico Letta made concessions to his uneasy coalition allies, promising to ease part of a slate of austerity measures that have weighed on Italians impatient at the slow pace of economic recovery.

While pledging the country will do what the eurozone wants to improve its public finances and debt problem, the center-left leader has to placate his tense two-day-old coalition, including former premier Silvio Berlusconi’s conservatives, whose support he needs for confirmation. (...)

Bending in part to a key Berlusconi campaign promise, Letta said his government will immediately suspend an unpopular tax on primary residences due in June and make it fairer to less affluent taxpayers. He also pledged not to raise the sales tax and to reduce some payroll taxes. “Reducing taxes is a priority,” Letta said, promising he would “pinpoint a strategy to revive growth without interfering with the process to heal finances.”

The European Union has insisted on rigorous austerity to heal Italy’s finances, but the public’s patience has been tried by spending cuts and higher taxes. Voters across the continent have been rebelling against governments that have imposed such measures. While Letta stressed the urgency of reducing the tax burden on homeowners, consumers and businesses, he didn’t say how he planned to make up for the reduced revenues. He might have to resort to more spending cuts, which could ultimately sharpen an already harsh part of the austerity agendas. (...)

Intent on reassuring eurozone governments and European Union officials that despite his demanding coalition partners, Italy’s would stay the course of economic reform, Letta will soon visit major European capitals. He begins in Berlin on Tuesday, assuming his government wins the Senate confidence vote. He’ll also visit Paris and Brussels to give, as he put it, a “sign that this is a European and a pro-Europe government.”

He vowed to keep the sales tax from rising to 22 percent from 21 percent in July, as predecessor Mario Monti’s government had planned. Italy’s business sector is worried the higher tax would discourage consumers from buying everything from washing machines to new clothing. The new premier also pledged to reduce payroll taxes for businesses hiring the young or those currently on temporary work contracts.

Italy’s central bank said Monday that Italian companies were suffering ever more as loans dry up, with banks reluctant to make risky deals. Italians are impatient after 18 months of austerity budget, pension reform and new taxes under Monti to see jobs return and the small and medium firms that power the economy bounce back. Letta denounced the “anger and conflict” that the five-year economic slump has triggered.

On Sunday, an unemployed man shot and wounded two police officers Sunday in a crowded square outside the prime minister’s office at the same time the government was being sworn in elsewhere in the capital. 

The premier indicated his impatience with the political class’ failure to enact reforms. He indicated that he would give this legislature 18 months to make serious inroads or he might throw in the towel. However, virtually nobody expects the new government to last anywhere near Parliament’s five-year term.

WP

Euro-Area Economic Confidence Falls More Than Forecast

Economic confidence in the euro area decreased more than economists forecast in April as the 17- nation currency bloc struggled to emerge from a recession and the bailout of Cyprus renewed debt-crisis concerns.

An index of executive and consumer sentiment dropped to 88.6 from a revised 90.1 in March, the European Commission in Brussels said today. That’s the lowest since December. Economists had forecast a decline to 89.3, according to the median of 26 estimates in a Bloomberg News survey.

Business confidence and investor sentiment in Germany, Europe’s largest economy, dropped more than expected in April. European Central Bank President Mario Draghi said on April 19 that the economic situation in the bloc hadn’t improved since the beginning of the month. At the same time, Draghi expects the economy to recover from a recession later this year and economists forecast growth in the second quarter, a separate Bloomberg survey shows.

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A gauge of sentiment among European manufacturers fell to minus 13.8 from minus 12.3 in March, today’s report showed. An indicator of services confidence dropped to minus 11.1 from minus 7, while consumer sentiment improved to minus 22.3 from minus 23.5.

With doubts about an economic recovery later this year growing, ECB policy makers have signaled they’re looking at a range of measures to boost growth, including cutting interest rates and a program to support lending to small and medium-sized companies. They are due to convene on May 2 in Bratislava for their monthly meeting.

“The flawed bailout in Cyprus has revived uncertainty in Europe,” said Annamaria Grimaldi, an economist at Intesa Sanpaolo SpA in Milan. “But I think the concerns are only temporary and we will see modest growth in the second half of this year.”

(...)

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Spain begs time to fix finances

Spain forecast it would climb out of its bitter recession in 2014 but needed two extra years to meet the European Union's target for reining in its public deficit. It announced its latest gloomy growth forecast for the current year along with a "stability plan" that aims to spur economic growth after more than a year of harsh cutbacks.

The government said Spain's economy, the eurozone's fourth-biggest, would shrink by 1.3 percent in 2013 and timidly return to growth of 0.5 percent in 2014. But it admitted it would likely take until 2016 to bring the country's public deficit -- a crucial measure of financial stability -- under the European Union's three-percent limit.

Unemployment will slide to 26.7 percent over 2014 and to 25 percent in 2015, the government added, announcing the latest crisis reforms it must send to Brussels for approval.

It forecast the public deficit would be 6.3 percent of gross domestic product (GDP) in 2013 -- well above its earlier target of 4.5 percent. The deficit would ease to 2.7 percent by 2016, it said, pushing back by two years the target earlier agreed with European authorities to bring it within the three-percent limit.

The EU's executive later approved the announcement, saying in a statement that it considered Spain's plan a "balanced -- but still ambitious -- fiscal consolidation path, given the difficult economic environment".

The 2013 growth figure, sharply down from an earlier estimate of a 0.5 contraction, reflected the ongoing damage from the collapse of a building boom in 2008 that thrust Spain into a deep double recession. "In 2013 the worst quarter will be the first quarter... and from there the data will improve," Finance Minister Luis de Guindos told a news conference. "The year 2014 is the year of recovery. We will reap the fruit of our economic policies." Meanwhile the public debt would climb to 91.4 percent of GDP in 2013 and reach 99.8 percent by 2016, he said.

The government is fighting to stabilise Spain's public finances through austere economic cuts that have sparked angry street protests. Budget Minister Cristobal Montoro on Friday called it "a Titanic austerity effort". Prime Minister Mariano Rajoy says the steps are needed to curb the public deficit and help the country save 150 billion euros ($195 billion) by 2014.

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EU rolls back sanctions on Myanmar, Syria

The EU has said it would ease back on economic sanctions against Myanmar despite objections from Human Rights Watch. An oil embargo against Syria is also to be lifted to help rebels fighting President al-Assad.

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Commission backs membership talks with Serbia

The European Commission on Monday recommended opening membership negotiations with Serbia following Friday’s historic deal with Kosovo. Belgrade and Pristina agreed a tentative accord last week aimed at normalising relations. Štefan Füle, the EU enlargement commissioner, said: “Serbia and Kosovo have proved that they can both focus on the future rather than staying entagled in the past.

The deal looks to end the ethnic partition of Kosovo between its Albanian majority and its Serb minority. Belgrade says it will not recognise Kosovo’s independence but will cede control of the country’s north to Pristina.

For Swedish Foreign Minister Carl Bildt, a former UN envoy in the Balkans, the agreement marks a turning point in the region.“The implementation of the commitment will not be easy, but there’s no way back. While we’ll be struggling with the details of implementation for quite some time to come, the rubicon has been passed,” Bildt told reporters in Luxembourg.

MPs in Serbia and Kosovo have backed the deal. It paves the way for Belgrade to open talks on joining the EU and European leaders will decide in June if Serbia is ready to start negotiations.Euronews’ Andrei Beketov said Belgrade and Pristina should fail to win over hardline nationalists and “translate words of congratulations into action then the door to the Union could be slammed shut to them.”

Euronews

Abysmal turnout in Croatia's EU vote

Two and a half months before Croatia joins the EU, just 21 percent of voters bothered to cast ballots in Sunday's (14 April) election of 12 new MEPs. 

The turnout is less than half compared to the country's referendum on EU accession in January last year, which saw 43.5 percent of people vote. It is also one of the lowest ever in EU polls, a record held by Slovakia in 2004, when just 17 percent of people voted.

Croatia's opposition centre-right HDZ party won six seats, narrowly beating the ruling centre-left SDP faction with five deputies. The nationalist and left-wing Labour party got one MEP.

The winners will act as observers with no voting rights in the EU assembly until Croatia joins the Union on 1 July. They will then serve for one year, before Croatia chooses a new set of euro-deputies in the general EU elections next May.

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Top five EU states push for tax transparency

France, Germany, Italy, Spain and the UK have agreed to more automatic exchanges of banking data to fight tax evasion, increasing pressure on Austria and Luxembourg to give up their veto on the equivalent EU bill. In a joint letter to the EU commission sent on Tuesday (9 April), the finance ministers of the five largest EU countries say they have agreed on a "pilot" project of "automatic information exchange" aimed at fighting tax evasion. The initiative is open to other member states and is based on a recently adopted law in the US - the Foreign Account Tax Compliance Act - that requires US citizens to declare their bank accounts held abroad and foreign banks to notify US tax authorities about their American clients.

A similar EU-wide law has so far been held up by Austria and Luxembourg, both keen on preserving bank secrecy for domestic and foreign clients. The five finance ministers "call on all EU member states to agree without delay" on the bill, so that "Europe can take a lead in promoting a global system of automatic information exchange, removing the hiding places for those who would seek to evade paying their taxes." (...)

Euobserver

Czech President Seeks Deeper EU Role for Country

The Czech Republic is turning over a new leaf aimed at winning it a bigger say over decision-making in the European Union where it has been somewhat isolated by its eurosceptic leaders in the last decade. Czech President Milos Zeman, who replaced the anti-European Vaclav Klaus last month, took his first symbolic steps Wednesday towards giving the country a more central role in helping Europe evolve.

Mr. Klaus and several Czech Prime Ministers have in recent years obstructed, delayed or watered down a series of EU initiatives such as the Lisbon Treaty and  Banking Union proposals. European Commission President Jose Manuel Barroso was alongside Mr. Zeman when he signed an addendum to the Lisbon Treaty that established the European Stability Mechanism, the euro zone’s bailout program. (...)

Immediately after putting pen to paper, Mr. Zeman and Mr. Barroso raised the EU’s blue and gold flag above the historic Prague Castle, the seat of the Czech Presidency, for the first time. “It’s a symbol of our entrance into the main current of European integration,” Mr. Zeman said. 

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