Italy's new prime minister will face an early test of his mission to reverse Europe's austerity course Tuesday as he meets German Chancellor Angela Merkel after vowing to stop a policy he says is killing his country.
Italian Prime Minister Enrico Letta arrives at Chigi Palace in Rome on April 30, 2013. He will face an early test of his mission to reverse Europe's austerity course Tuesday as he meets German Chancellor Angela Merkel after vowing to stop a policy he says is killing his country.
Enrico Letta's first official trip abroad comes a day after the new premier said his coalition government would act fast to reverse austerity, in a hard-hitting inaugural speech watched closely by Italy's European partners -- including Germany, the continent's austerity champion.
"Italy is dying from austerity alone. Growth policies cannot wait," he told parliament.
The leftist moderate, who took office after a two-month stalemate following February's inconclusive election, promised to deliver results to the recession-hit country within 18 months or "take the consequences".
In Berlin, Letta will be welcomed with military honours before an afternoon press conference followed by talks and dinner with Merkel, who has championed deficit and debt reduction for beating the debt crisis.
He then goes on to Brussels to meet European Union President Herman Van Rompuy.
Back home, the upper house of the Italian parliament began debating Letta's programme on Tuesday before holding a confidence vote on the new government.
Lawmakers in the lower house backed Letta's cabinet by a vote of 453 to 153 on Monday.
Letta told MPs the economic situation in Italy -- one of the first countries to fall prey to the eurozone debt crisis -- was "still serious" and that its two-trillion-euro ($2.6-trillion) debt "weighs heavily" on ordinary Italians.
But he also looked to Europe, saying it was suffering from "a crisis of legitimacy and... must become once more a motor of sustainable growth" -- a reference to his aim to persuade Europe to reverse its disputed austerity policy.
The 46-year-old from the centre-left Democratic Party said he wanted to deal quickly with the social fallout of Italy's longest economic slump in 20 years by tackling a jobless rate of 11.6 percent and regulating temporary job contracts.
He also said a controversial housing tax imposed by former prime minister Mario Monti would be suspended from June.
Letta said the political class must respond to a growing anti-establishment voice fuelled by anger over corruption and politicians' perks at a time of widespread financial difficulties in the eurozone's third largest economy.
The government's first act would be to cut the salaries of ministers who are also members of parliament and are therefore eligible for two salaries, he said.
The markets reacted favourably to the speech, with Milan stocks up around two percent on Monday, although they dipped in early trade Tuesday.
Italy also saw significantly lower rates to raise six billion euros at a five- and 10-year bond auction.
In Asian trading on Tuesday, the euro was at $1.3070 from $1.3097 in New York on Monday and at 127.80 yen against 128.01 yen.
Official statistics issued on Tuesday showed that unemployment was stable in March at 11.5 percent, although other figures showed that business confidence dropped sharply this month.
And ratings agency Standard & Poor's kept Italy's sovereign debt rating at "BBB+", following suit after Moody's kept its rating at "Baa2" Friday -- two notches above junk grade -- with a negative outlook.
Italy's debt will rise to 130.4 percent of gross domestic product this year, while the economy will shrink 1.3 percent, according to official forecasts.
Analysts say the coalition is likely to last long enough to push through key reforms but may be brought down by sparring parties within a year or two.