Bloomberg News

Monti’s Cabinet Approves Package to Spur Italian Economic Growth

January 23, 2012

(See {EXT4 <GO>} for more on Europe’s debt crisis.)

Jan. 20 (Bloomberg) -- Prime Minister Mario Monti’s Cabinet approved a plan designed to boost competition and spur economic growth as the euro area’s second most-indebted country seeks to fend off the fallout from the region’s debt crisis.

The package, Monti’s second major legislative effort since last month’s 30 billion-euro ($39 billion) austerity plan, was passed at an eight-hour Cabinet meeting in Rome. It will facilitate access to and reduce the privileges of Italy’s so- called closed professions, and also seeks to improve competition by having Eni SpA spin off its gas-transport unit Snam Rete Gas SpA.

“Italy’s economy has for decades been hindered in its economic and social growth by three big problems: insufficient competition, inadequate infrastructure and too much red tape,” Monti said at a press conference in Rome.

Monti, who as European Union competition commissioner blocked General Electric Co.’s $47 billion takeover of Honeywell International Inc., is lobbying European leaders to commit to growth policies as the euro-area economy slips into a recession amid a wave of austerity measures demanded to fight the debt crisis. Monti has said jumpstarting the expansion is vital to cutting the 1.9 trillion-euro debt of Italy, whose economy may shrink 1.5 percent in 2012, the Bank of Italy said on Jan. 17.

Today’s plan will be followed next week by the approval of a package of measures to reduce red tape in Italy, while the government is also moving to overhaul the country’s rigid labor laws, he said.

The package will include measures to reduce natural gas prices, increase competition among service station, boost the number of pharmacies, speed the selloff of local services and make it easier to get public works projects off the ground, Development Minister Corrado Passera said.

The measures will aid in opening 5,000 new pharmacies and allow for 500 new notaries to increase competition in those industries. Earlier drafts of the plan had indicated that 1,500 new notaries would be permitted.

The government also backed down from plans to double the number of taxi licenses after a week of protests by cab drivers in Rome and other cities. A newly created transport authority will be set up to decide on new licenses in consultation with the mayors of cities affected.

“Any increase in licenses will be counterbalanced by tangible compensation for those taxi drivers who already own a license,” Deputy Prime Minister Antonio Catricala said.

The government will also create part-time licenses to allow new drivers to use cabs when they are out of service, Catricala said.

Monti signaled that spurring competition doesn’t necessarily mean the government will sell off state-owned assets. “Liberalizations, greater competition doesn’t mean privatization,” he said.

--With assistance from Alessandra Migliaccio in Rome. Editors: Andrew Davis, Dan Liefgreen

To contact the reporters on this Chiara Vasarri in Rome at cvasarri@bloomberg.net; Jeffrey Donovan in Prague at jdonovan26@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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