ITALY: Fear that the markets' fall will worsen the already fragile country's economy

Record ID: 805104

  • Title: ITALY: Fear that the markets' fall will worsen the already fragile country's economy
  • Date: 20th August 2011
  • Summary: MILAN, ITALY (RECENT) (REUTERS) VARIOUS EXTERIORS OF MILAN STOCK EXCHANGE
  • Embargoed: 4th September 2011 13:00
  • Keywords:
  • Location: Italy, Italy
  • Country: Italy
  • Topics: Business,Finance
  • Reuters ID: LVA6EFW265DH04OY4CH3FZCXJK0O
  • Story Text: As European stocks are slated for another steep fall on Friday (August 19), Italians brace for what will come over the following months, when they will have to face the consequences of a recently approved austerity package that will heavily weigh on their shoulders.
    European shares on Thursday (August 18) also experienced huge losses when they suffered their biggest daily slide in two and a half years, with Milan's stock market losing over six per cent.
    Discontent grows among Italian citizens, stuck between stock markets often perceived as run by speculations and the tax hikes and cuts they will have to suffer to meet the European Central Bank demands for action on shoring up Italy's strained public finances.
    "They used to say that banks and insurance companies were brigands, I think that those companies operating now are real crime organisations", said Renato Maggi, a disgruntled Rome resident.
    "When a political entity shows signs of weakness, and in the case of Europe, signs that it doesn't exist, markets take advantage of it, as they take advantage of the Italian situation", said Rome resident Jacopo Bartolomei. "When they sense weakness, the sharks of the finance arrive, to make big money on the short term", he said.
    On Tuesday German Chancellor Angela Merkel and French president Nicolas Sarkozy unveiled plans for deeper fiscal union including the introduction of a constitutional brake on national deficits, but markets did not show signs of confidence in their announcement.
    "The European Union at the current juncture doesn't look like it can hold itself together", said Gavin Jones, Reuters Senior Economics correspondent. "Markets don't have confidence that the mechanisms are being put in place to solve the debt crisis are sufficient."
    Thursday's markets fall, the worst since March 2009, was mostly on a raft of gloomy U.S. economic data and concerns over short-term funding stress on European banks.
    "I think this crisis is bigger than Italy now, I think that the falls in the Milan stock market can't really be related to the austerity measures the government just passed", said Jones. "Now markets are very worried about global recession", he said, "and Italy is at the bad end of that. Italian growth as usual is expected to do worse than the rest of the eurozone, excluding Greece and Portugal."
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