ECB steps up pressure on Italy as debt worries grow

European Central Bank President Jean-Claude Trichet told Italy to deliver on promises to control its strained public finances and reform its economy, adding to international pressure on weakened premier Silvio Berlusconi.
ECB support is vital because the Frankfurt-based central bank has been buying Italian bonds in markets to keep yields low enough for Rome to continue borrowing without needing outright aid from the EU or IMF.
Trichet said measures promised on August 5, when Berlusconi said he would balance the budget by 2013 and launch major economic reforms, were "extremely important."
"It is therefore essential that the objectives announced for the improvement of public finances be fully confirmed and implemented," he said in an interview with Italian business daily Il Sole 24 Ore on Friday.
Trichet's comments underline rising concern at Italy's haphazard progress in agreeing measures to bring its strained public finances under control.
"In the case of Italy, financial markets, domestic and international investors are worried about the credibility of economic policy," said Nouriel Roubini, one of the economists who predicted the global financial crisis.
"There are fears that the leadership of the country is damaged," he said at a conference in the northern Italian town of Cernobbio.