* Confindustria- austerity package "weak and inadequate"
* Group raises concern for how govt is handling situation
* Berlusconi says VAT hike is a possibility
(Adds Berlusconi comments)
By Giulio Piovaccari and Catherine Hornby
MILAN, Sept 1 Italian employers' group
Confindustria slammed the government's austerity plan as "weak
and inadequate" on Thursday and expressed concern about how
Italy's economic problems are being handled.
The group said that, despite recent amendments, the 45.5
billion euro ($65.29 billion) austerity package, approved by
Silvio Berlusconi's government last month, lacked clarity and
did not contain structural measures to boost growth.
"The package that is being laboriously shaped seems weak and
inadequate", the powerful business lobby said in a statement.
It expressed "strong concern for how the serious situation
of Italy's public finances and the economic recovery is being
The austerity package, a mix of spending cuts and tax hikes
aimed at balancing the budget in 2013, was drawn up hastily last
month to reassure panicked markets over the solidity of public
finances in the euro zone's third largest economy.
But it has been widely criticised since, and has been
changed repeatedly as Berlusconi rows back on measures in the
face of protests, at times just days after they have been
The chairman of the association of Italian municipalities,
Osvaldo Napoli, described the situation as "disastrous" on
Thursday, and said mayors would continue their protest.
The government has already scrapped a proposed "solidarity
tax" on high earners and reduced planned cuts to local authority
funding. It has also backtracked on measures that would have
delayed retirement for many university graduates.
Berlusconi told reporters late on Thursday that he had
reassured European Union leaders that Italy would achieve its
2013 target to balance the budget.
He described opposition parties, which have fiercely
criticised the plan and proposed their own alternatives, as
"criminals" and "anti-Italian" and said they were fuelling
market concern about Italy.
Economy Minister Giulio Tremonti repeated on Thursday that
the overall size of the deficit cuts would remain the same in
the revised package.
But the changes have left a funding shortfall estimated at
anywhere between 4 and 6 billion euros. A lack of detail has
made it difficult for analysts to judge whether the measures
will be enough to achieve the required deficit cuts.
Berlusconi told Il Tempo daily on Thursday that the
government could increase value-added tax by one percentage
point to 21 percent if needed to fill the shortfall.
He also said later that VAT could be raised to 22 percent
for three months, if necessary.
Confindustria said the government's changing plan
"underlines the risks that inadequate management of these
problems can have for Italy and all of Europe".
Wrangling over the package has caused tension in
Berlusconi's government, and more changes are likely before the
amended version is passed in parliament later this month.