Battered by rising borrowing costs and under the eye of other European governments, Italy’s Senate on Thursday upped the size of planned budget cuts in an effort to prevent the euro zone’s third-largest economy from slipping into the debt crisis that has already claimed three smaller nations.
As the Senate approved a $68 billion package of tax hikes and spending reductions, Finance Minister Giulio Tremonti warned that the problems facing the euro currency zone had become like “the Titanic, not even first class passengers will be saved.”
His comments underscored the anxiety felt throughout Europe and in Washington about the speed with which even a large and seemingly stable economy could be brought under the same type of pressure that has forced Greece, Ireland and Portugal to seek emergency help from their neighbors and the International Monetary Fund.
Thursday’s vote, which ratcheted up the amount of belt-tightening planned by the government, was meant as a forceful reassurance that Italy is serious about balancing its books in the next few years and beginning to reduce an outstanding pile of debt that is around 120 percent of annual economic output. The lower house of parliament is expected to approve the measures on Friday.