Open

Coming up

Don't miss

Replay


LATEST SHOWS

DEBATE

Iraq's Christians - Nowhere to Run? (part 2)

Read more

DEBATE

Iraq's Christians - Nowhere to Run?

Read more

MEDIAWATCH

Towards a "Third Intifada"?

Read more

FOCUS

What solutions for California's overcrowded prisons?

Read more

MIDDLE EAST MATTERS

Gaza conflict: Palestinians mark sombre Eid

Read more

WEB NEWS

Celebrities in the Israel-Gaza crossfire

Read more

IN THE PAPERS

Israeli strike takes out Gaza power station

Read more

IN THE PAPERS

French newspaper apologises for Sarkozy story

Read more

BUSINESS DAILY

Last-ditch talks aim to avert Argentina default

Read more

  • Video: Inside Hamas ‘terror’ tunnels in Gaza

    Read more

  • Scores feared dead in India landslide

    Read more

  • Russia defiant as US, EU unveil 'phase three' sanctions

    Read more

  • Israel says it is 'days' from completing Gaza tunnel hunt

    Read more

  • US House votes to sue Obama for over-reaching his powers

    Read more

  • Argentina fails to reach deal with creditors

    Read more

  • Women should not laugh in public, Turkey's deputy PM says

    Read more

  • Suspect in Jewish Museum attack charged with 'terrorist' murder

    Read more

  • Fourth female suicide bomber targets Nigerian city

    Read more

  • US rebounds to 4% growth in second quarter

    Read more

  • Video: Coping with rocket attacks in Israel’s Sderot

    Read more

  • Rats on the rampage at Louvre museum gardens

    Read more

  • France evacuates nationals, closes embassy in Libya

    Read more

  • 'Compelling' signs Kosovo leaders trafficked organs, prosecutor says

    Read more

Business

Aid for auto industry demands production stays in Italy

Latest update : 2009-02-06

Prime Minister Silvio Berlusconi announced new measures worth two billion euros to help the economy and auto industry. But Berlusconi's desire to keep factories from relocating outside Italy risks criticism amid a wider debate about protectionism.

AFP - Italian Prime Minister Silvio Berlusconi announced new measures worth 2.0 billion euros (2.6 billion dollars) to boost the economy and help the auto industry on Friday, but he tied the aid to keeping factories at home.
   
The package approved by the government Friday provides a 1,500-euro bonus for people trading in their old vehicle to buy a new one, alongside tax breaks on purchases of furniture and other household goods.
   
Other bonuses will apply for motorcycles and environmentally friendly vehicles, with the measures for the auto sector available through this year and worth 1.2 billion euros in total.
   
Berlusconi in turn called on the auto industry to keep its plants "in Italy, to invest in new products and to keep up payments to components suppliers."
   
Such remarks risk getting caught up in a wider row about the risk of countries resorting to protectionist policies as they seek to rescue their ailing economies from the global slump.
   
On Friday, the Czech presidency of the European Union criticised French President Nicolas Sarkozy for saying French automakers should consider relocating back to their home base to create jobs there.
   
Berlusconi's cabinet also approved a sharp downward revision to its economic forecast for this year, predicting that gross domestic product would contract 2.0, making it the worst recession in more than 30 years.
   
The government's previous forecast made in September 2008 had been for the economy to expand 0.5 percent this year.
   
In November, the government launched a five-billion-euro package for 2009 to cope with economic slump but the opposition, unions and employers all criticised the plan as too modest to have any real impact.
   
Economic Development Minister Claudio Scajola said that Italy's auto fleet had the oldest average age in Europe and the bonus, aimed at vehicles older than 10 years, could cover up to 15 million cars.
   
Berlusconi said the government was also looking at another eight billion euros to cover benefits for workers laid off temporarily.
   
The global slump saw Italian new car registrations plunge 32.6 percent in January. Fiat, the leading domestic manufacturer, has warned of potentially huge job losses ahead.
   
Fiat boss Sergio Marchionne said last month that 2009 will be "the toughest year ever" for the industry and warned 60,000 jobs in Italy -- where the industry employs 400,000 -- could be at risk unless the government stepped in.
   
Union leaders rounded on the government recently as the package was being worked out, saying that while France was prepared to help its automakers with up to six billion euros, Rome was only willing to spend small amounts.
   
In January, Fiat said it would cut production in February and March after announcing a major tie-up with Chrysler and slashing its 2009 forecasts.
   
Some 5,000 workers at the company's Mirafiori plant in Turin will be idled in the last week of February and the first two weeks of March.
   
Production will also be halted for between two and four weeks at the Pomigliano, Cassino, Melfi and Termini Imerese plants, the company said.
   
All of Fiat's Italian plants were closed between mid-December and mid-January.
   
The government's ability to act decisively on the crisis is limited by the precarious state of the public finances, made worse as the economy falters, cutting revenue and increasing the need to spend.
   
In January, ratings agency Standard and Poor's warned that while it maintained its A-plus rating on Italy's long-term debt, the country's public deficit and total debt would widen.
   
S&P said it expected Italy's total public debt to grow from 107 percent of gross domestic product (GDP) in 2007 to 109 percent in 2009, a level at which the country would have difficulty sustaining its economy in a time of recession.

Date created : 2009-02-06

COMMENT(S)