Italian MPs approve tough budget

15 July 2011 Last updated at 16:28 GMT Protesters have showed their anger at the budget cuts Italy's lower house has completed parliamentary approval of a tough austerity budget aimed at strengthening the country's public finances.

The Senate had passed the package - including 48bn euros ($67bn; ?42bn) in cuts over three years - on Thursday.

Italy has one of the largest public debts in the eurozone, and wants to avoid any need for a bail-out.

Prime Minister Silvio Berlusconi has said Italy is on the front line of the eurozone's economic difficulties.

Italy raised 2.97bn euros ($4.2bn; ?2.6bn) through a sale of 15-year government bonds on Thursday, but had to offer a 5.9% rate of return - an all-time high for such bonds.

Benefit cuts

The vote passed the lower house by 314 votes to 280.

BBC Europe editor Gavin Hewitt, in Rome, says both the government and the opposition know that Italy is under fierce scrutiny by the markets because of its large debts.

Earlier this week, the International Monetary Fund (IMF) asked Italy to ensure "decisive implementation" of spending cuts.

In a report, the IMF said Italy must make efforts to reduce public debt, maintain the stability of its financial sector and introduce structural reforms to boost growth.

The measures agreed by parliament include increases in health-care fees, cuts to regional subsidies, family tax benefits and top-level pensions, and public-sector salary freezes.

The government is also looking to raise the retirement age and to privatise state-owned companies.

The package was put to parliament ahead of schedule, amid concerns that Italy may be the next country to be hit by the eurozone's debt crisis.

The left-wing opposition said it was too tough on the least well-off, and voted against it.

Even so, they said they would not delay it with amendments, so as not to prolong uncertainty in the markets.

Italy's Finance Minister Giulio Tremonti hopes it will cut the deficit to zero by 2014 from this year's 3.9% of gross domestic product.

He said in parliament that, without the budget, ''the monster debt from our past will swallow up our future''.

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Tough EU talks ahead for Iceland

28 June 2011 Last updated at 08:53 GMT Iceland already fulfils some EU criteria but years of talks may lie ahead Iceland has formally opened what is expected to be a long negotiating process with the EU over accession, as a dispute over fishing rights persists.

Speaking in Brussels, Iceland's Foreign Minister Ossur Skarphedinsson said his people were still not committed to joining because of the issue.

He did not expect Iceland to join the EU for at least two years, he added.

A strong fisheries lobby is opposed to surrendering exclusive access to fishing grounds to other states.

When Iceland recently increased its mackerel catch to exploit a glut in its waters, the EU threatened to block Icelandic boats from using its ports.

Another outstanding issue is the country's settlement of a row with the UK and the Netherlands over debts linked to the collapse of its banking industry in 2008.

However, the tiny nation of 323,000 is otherwise well-positioned to join the other 27 members of the EU.

It has a stable, centuries-old democratic tradition and is already part of the European Economic Area and the Schengen visa-free travel zone.

'Highly integrated'

Hungarian Foreign Minister Janos Martonyi, who headed the EU side at Monday's talks, said a "historic moment" had been reached in relations with Iceland.

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My logic tells me we will come to a deal... but based on my experience, those negotiations will be difficult, drawn out and might postpone the final outcome... ”

End Quote Ossur Skarphedinsson Icelandic Foreign Minister "Iceland is a country which is already highly integrated into the European system," he said.

To join the EU, Iceland must successfully conclude negotiations on 35 policy areas ("chapters"), bringing its laws into compliance with EU norms.

With Brussels effectively waiving negotiations on two chapters - science/research and education/culture - its Commissioner for Enlargement, Stefan Fuele, said he looked forward to talks on agriculture and the fisheries at the earliest opportunity.

Mr Skarphedinsson said he expected talks on fisheries to begin in the second half of this year.

He told Reuters news agency: "It all hinges on fisheries.

"If they [EU officials] listen to our arguments carefully and accept our arguments... it will be swift.

"My logic tells me we will come to a deal... but based on my experience, those negotiations will be difficult, drawn out and might postpone the final outcome...

"I assume fisheries will be the last chapter to be finished."

If the talks are successful, Iceland's bid still faces a referendum.

Earlier this month, another candidate, Croatia, was given the go-ahead to join the EU and that is likely to happen in 2013.

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