Italy’s Monti to discuss “sacrifices” with parties

Prime Minister-designate Mario Monti meets the leaders of Italy's biggest two parties on Tuesday to discuss the "many sacrifices" needed to reverse a collapse in market confidence that is driving an ever deepening euro zone debt crisis.
Global equity markets and the euro slid on Monday on doubts Monti and Greece's new leader would take the tough steps needed, and a report said the situation in triple-A rated euro zone power France should be "ringing euro zone alarm bells".
German Chancellor Angela Merkel caught the mood of crisis with a stark warning on Monday that Europe could be living through its "toughest hour since World War Two". She told her CDU party she feared Europe would fail if the euro failed and vowed to do anything to stop this from happening.
Monti will pursue his efforts on Tuesday to secure enough support from Italy's feuding politicians to allow his cabinet of experts to speed up delivery of painful reforms of pensions, labour markets and business regulation needed to put Italy's finances on a sustainable footing.
Italy has to refinance some 200 bln euros ($273 bln) of bonds by the end of April, a daunting prospect given it was forced on Monday to pay a euro-lifetime record yield of 6.3% to sell five-year bonds to wary investors.
The auction, and the release of figures showing industrial production slumped by 2% in the euro zone in September, raised the spectre of recession and provided a gloomy backdrop to Monti's consultations with the heads of smaller parties.
"Monti spoke about a significant programme with many sacrifices," Francesco Nucara, a lawmaker from one of the myriad tiny parliamentary groups involved in the talks, said after meeting the prime minister-designate.
Monti, a respected former European commissioner, was due on Tuesday to meet leaders of the two largest parties of the centre-right and the centre-left, unions, and representatives of women and youth groups.
Monti, who is expected to seek a confidence vote by Friday, told a news conference that he aimed to serve until scheduled elections in 2013, not just until reforms had been pushed through.
Far-reaching reforms are seen as crucial if Italy is to end years of stagnant growth, trim a debt mountain equal to 120 percent of gross domestic product and avoid the sort of crisis that forced bailouts of Greece, Ireland and Portugal.
With the very survival of the 17-state currency zone in its current form now at risk, EU governments have until a summit on Dec. 9 to come up with the outlines of a bolder and more convincing strategy, with some form of massive, visible financial backing.
Prospects are uncertain as the German government, the Bundesbank and hardliners in the European Central Bank have blocked key policy options.
These include issuing common euro zone bonds, mutualising the euro zone's debt stock, letting the ECB create money to fight the crisis, or having it act as lender of last resort, directly or via the euro zone rescue fund.
The urgency of resolving the persistent crisis was underscored by a report by the Lisbon Council, which said France's inability to make rapid adjustments to its economy was a serious concern and should be of acute concern for the euro zone.
"Among the six euro zone countries with a AAA rating, France achieves by far the lowest ranking in the study's fundamental health check," the Brussels-based think-tank found in the 75-page report, called the Euro Plus Monitor.
"The results are too mediocre for a country that wants to safeguard its place in the top league… Alarm bells should be ringing for France."