Italian consumer confidence plunged to the lowest in more than 15 years in April as Prime Minister Mario Monti’s austerity drive deepens the recession in Europe’s fourth-biggest economy.
The confidence index declined to 89, the lowest since the series began in 1996, from a revised 96.3 in March, national statistics office Istat said in Rome today. Economists forecast a reading of 96.2, according to the median of 12 estimates in a Bloomberg News survey.
“The drop is due to a technical correction after the rise seen in the previous months and to the fact that consumers are starting to become more aware of the negative effects of the austerity measures in the short term”, Annalisa Piazza, a strategist at Newedge Group in London, said by phone. “None of the sub-indexes give encouraging signals,” she added.
Monti is implementing 20 billion euros ($26.5 billion) of spending cuts and tax hikes to fight the debt crisis. The measures, which will also lower pensions, have brought record gasoline prices and helped push the economy into its fourth recession since 2001. Italy will shrink 1.2 percent this year and joblessness at an 11-year high of 9.3 percent won’t start falling until 2013, the government forecast last week.
“Unemployment will keep soaring sharply as the conditions that caused it will remain,” Confindustria, the country’s main employers’ lobby, said in an April 18 report. “There will be more job cuts and an increase in people looking for employment amid a decline in real income.”
In addition to the austerity plan, the government introduced measures aimed at bolstering economic growth by deregulating services and cutting bureaucratic red tape. Earlier this month, it also passed an overhaul of the labor market, including more leeway for employers to fire staff and a new system of unemployment benefits. The bill must be approved by lawmakers.
Istat originally reported March consumer confidence of 96.8.
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