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Italy's Letta starts work with call for growth

Monday, April 29, 2013 - 02:37

April 19 - New Italian Prime Minister Enrico Letta has called for growth in his first speech to parliament. While investors have welcomed the arrival of his coalition government, Joanna Partridge takes a look at the severe political and economic problems it faces.

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Starting a job with a long to do list. Italy's new Prime Minister Enrico Letta gave his maiden speech to parliament and asked for their backing. SOUNDBITE: Enrico Letta, Italian Prime Minister, saying (English): "Italy's economic situation remains serious. In the past we have built up a public debt which weighs on present and future generations." The start of the coalition government was overshadowed by Sunday's gun attack, where an unemployed man shot and wounded two police officers and a passerby. It's raised concerns about social tensions which have built up after almost two years of economic crisis. SOUNDBITE: Fabio Cruciani, Rome resident, saying (Italian): "I have my doubts about this government, I don't know how long it can last but we have to believe they might be able to agree with each other and do some good work for all of us." Investors in the euro zone's third largest economy are glad to see an end to two months of political deadlock. Italian and European shares rose on Monday, while Italy's medium and long-term borrowing costs dropped to their lowest level since October 2010. The markets now hope Italy will implement reforms, says Will Hobbs from Barclays. SOUNDBITE: Will Hobbs, VP Research, Economics & Strategy, Barclays, saying (English): "Italy has lived with a very high debt to GDP ratio and almost permanent political chaos for a very long time. Just to give you an idea of that, since the end of the Second World War, the average life cycle of an Italian parliament is roughly a year, a little bit over, so that does go to show that Italian bond investors, Italian investors generally have lived with a good degree of uncertainty for some time." Letta faces some difficult tasks. He's been forced into a coalition with Silvio Berlusconi's party, after his centre-left Democratic Party fell short of being able to govern alone in the February elections. Letta has promised to focus on growth, and tackle youth unemployment. He may roll back austerity measures, says Richard Hunter from Hargreaves Lansdown. SOUNDBITE: Richard Hunter, Head of Equities, Hargreaves Lansdown, saying (English): "There is clearly some unrest on the streets, both in terms of the current and the prospective economic situation, so he's got a very difficult line to walk along, and so have many of the other leaders in the other peripheral unions, between keeping social unrest to a minimum while keeping the European powers that be happy." Letta wants to keep Europe on side, he's already scheduled visits to Berlin, Paris and Brussels. However long his government lasts, he has his work cut out - he'll need to keep the coalition together, pass unpopular reforms, and convince Italians he's getting their economy back on track.

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Italy's Letta starts work with call for growth

Monday, April 29, 2013 - 02:37