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ECONOMY

Italy’s economic policies will hit the poor hardest: IMF

Economic policies implemented by the populist government in Rome leave Italy's economy vulnerable to recession, with the poorest likely to suffer the most, the IMF warned.

Italy's economic policies will hit the poor hardest: IMF
Italy's economic policies could lead to recession, the IMF said. Photo: Andreas Solaro/AFP

“The authorities' policies could leave Italy vulnerable to a renewed loss of market confidence,” an International Monetary Fund annual report on the country said yesterday.

“Italy could then be forced into a notable fiscal contraction, pushing a weakening economy into a recession. The burden would fall disproportionately on the vulnerable,” the IMF added.

The Italian economy, the eurozone's third largest, fell into a technical recession at the end of 2018.

The fund expects the Italian economy to grow by no more than 0.6 percent this year, well below the government's own estimate of 1.0 percent.

The European Commission is tipped to lower its Italian growth forecast on Thursday, and slower growth could spell trouble for Italy, where around 20 percent of national output is swallowed up each year by payments on the public debt, the second biggest in the eurozone.

Photo: Depositphotos

The IMF report praised the coalition government's “objective to improve economic and social outcomes (as) welcome.”

But it added that the only sustainable way of achieving such goals was through “faster potential growth” that would require structural reforms, “a credible fiscal consolidation” and stronger bank balance sheets.

The coalition government of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its ambitious and costly budget in December to avoid being punished by the EU Commission and financial markets.

The IMF report emphasised Wednesday that Italy “needs to tackle long-standing structural impediments to productivity growth. 

“This includes decentralising the wage bargaining regime, liberalising service markets, and improving the business climate.”

Deputy Prime Minister and M5S leader Luigi Di Maio quickly rejected the IMF report, charging that the Fund “has starved people for decades.”

The IMF, Di Maio claimed, “has no credibility to criticise a measure like the citizenship income programme,” the party's plan to introduce a welfare payment of 780 euros a month for Itay's least well-off.

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SAS

‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers. 

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