Italian PM Mario Monti’s austerity drive gets lower house approval

Prime Minister of Italy, Mario Monti’s austerity plan cruised to victory in the Chamber of Deputies’ confidence vote on Friday. The overwhelming victory of 495 to 88 in the lower house is expected to increase Italy’s chance in receiving bailout package amounting to € 33-billion or $43 billion. Mario Monti still has to get the final approval of the Senate (upper house of the parliament) next week for the smooth passage of austerity package.

Italy’s ‘Super Monti’ is currently under immense pressure from leaders of Europe to put a cap on spending and generate funds to boost Italian economy. Once the austerity bill is passed by both houses of parliament, Mario plans to implement a series of measures to address Italy’s huge debt crisis and balance 2013 budget through increased tax and pension reforms. Some of the immediate steps government of Italy is likely to take are - reintroducing ‘tax on first homes’ (earlier abolished by the previous Berlusconi government), hiking real estate tax and also some growth incentives.

Though Italian Premier’s austerity plan enjoys parliamentary consensus, many in the main opposition parties are skeptical that the proposed measures might be unfair on the poor in society. They are going to be the hardest hit of the austerity cut.

Mario Monti on the hot seat as new Italian Premier

Only a day after the exit of Berlusconi, Giorgio Napolitano as the President of Italy gave his formal approval to Mario Monti to become the new Prime Minister on Sunday. In doing so, the cool and competent 68-year-old Monti has replaced the charismatic and flamboyant Silvio Berculoni to head Italy. Lovingly called ‘Super Monti’, the new Italian Premier has recently received the “senator for life” title from the Italian President for his distinguished role as an economist and as ex-European Commissioner.

It is said that Mario Monti had initially showed interest to form a coalition government, but after most of the major parties showed their reluctance, that idea was shelved. It is now expected that the new cabinet would consist largely of technocrats.

As the new Italian Premier, Mario’s priority will be to implement austerity measures, arrest Italy’s piling debt crisis and win back the confidence of financial markets. Not an easy task, considering that Monti will be closely watched not only by his own country, but also by the EU leaders and skeptical investors. It is indeed ‘the’ testing time for Italy’s Super Mario and also a nerve-racking moment for Europe who are desperate to cut back on Euro risk (currency).