The Government must now find a second wind

The center-left Government is finally reached, after a final vote of confidence, yesterday, to adopt the budget for 2007 in the Parliament, by 337 votes for and 262 votes against. A war of attrition which leaves it weakened, while he already has a majority. Budget to bring back the public deficit of 4.8 to 2.8 of GDP, which earned him the congratulations of Brussels. But the European Union is virtually alone in applauding the Italian Government. Other experts IMF, OECD, economists and rating agencies feel that the balance of accounts must too to tax increases and not enough on decreases in spending.

"Fake", says the Minister of economy, Tomaso Padoa-Schioppa. Of course, there are 5 billion euros of new recipes, but also 8 billion due to the fight against tax evasion. Spending to support the economy and research, the Italy is needed: growth is lower than that of the France and the Germany.

But the text sparked the protests of practically all the Italian company: employees, professions Liberal, traders and artisans, patterns and academics. Silvio Berlusconi reached, on 2 December, gathering of 1 to 2 million people in Rome at the demonstration of protest against the budget. And despite tax relief for low income (below 40,000 euros per year for employees of 32,000 euros for the self-employed), the Fiat workers whistled the unions at a meeting in Turin.

If the latter generally gave their support to the new Government, the Confindustria, the employers, is critical. For its economists, the Finance Act will curb growth, which would only 1.1 compared to 1.3 envisaged by the Government after 1.8 this year. The Confindustria is mistaken, said Finance Minister, accusing the employers Union to behave as a political party.

Reducing debt

Despite all the difficulties, the Government has recovered some of the ground lost in the polls: the more low in November with 34 of satisfied, it rose 40 mid-December, according to an Ipsos survey for the "Corriere della Sera". The fight against tax evasion and the revision of the scale of the income tax in particular seem to appeal to voters.

The Government must now find a second wind. Some Ministers called their greeting a "phase 2" of structural reforms. A term that Romano Prodi rejects, believing that he has already been reforms and will continue to do. In addition to pensions, working time and competition are among the urgent. Treasury has published his battle plan: identify a surplus primary (before debt service) 5 to start to roll back the debt: today to 107.6 of the domestic product, it should already achieve 103 next year. And he plans to continue privatization. At the forefront of these figure Alitalia, including 30 of the capital should be placed on the market by the State before the end of the year. But some Italian industrialists, such as De Benedetti, said that, in view of the conditions attached to the sale, they could be interested.

And Emma Bonino, Minister for European Affairs, was added last Monday, that the way in which the Minister of infrastructure, Antonio Di Pietro, had changed the rules of the game during the OPA of Abertis to Autostrade would deter foreign investors to come to Italy. A debate which demonstrates that the first problem of Romano Prodi is not to decide on reforms, but reach to act and speak his Government with one voice. This is what he will seek by organizing a meeting of Ministers and political leaders after the holidays.