Fiats Agnelli Says Industry Backs Tough Emu Steps

Agnelli, 75, in an article written for Reuters, said Italy owed participation in the move to a single currency scheduled for 1999 not only to itself but also to its neighbours and the western European political process.

The elder statesman of Italian industry, who retired last March after 30 years at the head of the car group, said the country had gone a good part of the way along the road towards restored economic health but still had much ground to cover.

He said if Rome could give more signs it was committed to economic reform aimed at EMU in 1999, it will certainly be able to count on support of the nations manufacturing system, workers and public opinion at large.

 

Agnelli, called EMU an important way to reinvigorate the political pact binding western Europe, saying: Italys failure to join EMU would weaken not just our own growth prospects but also the very survival of the European political design.

Without Italy, Europe would lack a major player, not just in terms of size but above all in ability to strike a balance between the various partners.

Any country staying out of EMU faced a bleaker future, Agnelli said. Non-participation would open a period of uncertainty and reduced competitiveness for those left out of the inner circle.

The governments 1997 budget aims to slash a massive 62.5 trillion lire ($41 billion) off next years projected deficit.

It was specifically designed to spur Italy, which is weighed down by a large public sector deficit, into joining EMU at its proposed 1999 launch and includes a one-off Euro Tax to raise at least 11.5 trillion lire.

Agnelli said however Italy, along with Greece, clearly had the furthest of all European Union partners to go in its efforts to meet the Maastricht Treaty criteria in time.

He said both sides of Italian industry must commit themselves to a stability pact that would last the five-year lifetime of the current legislature.

One essential feature of that pact must be to give new momentum to income policy as the only way to achieve a drastic cut in inflation and hence a further reduction in interest rates.

This could be decisive in cutting public debt and stimulating manufacturing investment, he said.