The fund will kick in from 2013 so will come far too late in the day to help any of Portugal, Ireland, Italy, Greece or Spain – though their debts are so big they are unlikely to have been pared down let alone paid off by the time it comes into being.
Italy, Europe’s third largest economy is the latest to in the spotlight, with the International Monetary Fund asking it to ensure "decisive implementation" of spending cuts to reduce the country’s debt. It is following a well-trodden path and putting together various austerity measures including a proposed €48bn (£42bn) in budget cuts over the next three years, cutting the deficit to zero by 2014. It is currently 3.9% of GDP.
In an IMF report, the organisation suggests: “The main policy goals should be to continue pursuing fiscal consolidation to reduce the large public debt, maintain financial sector stability, and boost growth potential through structural reforms.”
It predicts the Italian economy will grow by 1% in 2011 compared to 1.3% last year.
