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20. 01. 12. - 18:00

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20. 01. 12. - 18:00

Monti's anti-monopoly measures find acclaim

A leading economic expert has welcomed Italian Prime Minister Mario Monti’s reform plans.

Monti revealed ambitions to break up the monopoly situation which currently existed in some parts of his country’s economy. The former European commissioner explained he wanted to liberalise a number of sectors including the Italian network of pharmacies and its taxi businesses. Cab drivers fear disadvantages in competition as many of them spent tens of thousands of Euros to obtain a licence.

Monti reportedly plans to scrap the current system to allow more competition. He also wants to restructure the domestic financial sector and introduce measures affecting the activities of electricity and gas companies.

Gianluca Spina, dean of the business school at the Politecnico de Milano, told Austrian newspaper Kurier today (Fri): "Protests against increasing competition by the various business sectors had to be expected. It is understandable that taxi drivers and pharmacists oppose the planned reforms."

Spina pointed out that a situation of "real competition" would be created in the energy sector. "The provision with gas costs up to 50 per cent more in Italy than in Great Britain," he stressed. The expert also said that express train tickets cost significantly more in his country than elsewhere in Europe.

Spina told the Kurier he was satisfied with Monti’s decision to smash the existing monopolies. "The results (of his measures) such as new jobs and an urgently needed economic boost will be felt only in a few years’ time," he said.

The expert on the Italian economy said he feared that Standard & Poor’s (S&P) recent downgrading of Italy’s solvency "will negatively affect the sale of government bonds. Europe should set up an own and public rating agency." Spina stressed that China had its own credit rating agencies.

S&P lowered Italy’s rating by two grades to BBB+. The US American credit rating agency also reduced its estimation concerning the economic condition of eight other European Union (EU) members – including Austria. The alpine country’s credit rating was lowered from the best possible grade of AAA to AA+.

Fitch and Moody’s, the world’s other leading rating agencies, confirmed their triple-A check for Austria only some weeks ago. However, both agencies expressed concerns regarding Austria’s soaring debts. S&P identified the country’s strong economic ties with Italy as a big risk factor. S&P is also sceptical concerning Austrian banks’ operations in debt-stricken Hungary.

Austrian President Heinz Fischer appealed on the government coalition of Social Democrats (SPÖ) and the conservative People’s Party (ÖVP) to restore the public budget. Fischer also said it would have been "fair" by S&P to await the results of the coalition’s current negotiations. SPÖ and ÖVP started talks about a debt limit and a savings package in November. SPÖ Chancellor Werner Faymann branded S&P’s verdict as "wrong" while ÖVP chief Michael Spindelegger said it was "incomprehensible" in his opinion.

Europe’s political leaders are at odds over whether the creation of a new rating agency would make sense. Experts stressed that such an organisation’s credibility could be shattered if it was founded and funded by European institutions which it would then be asked to examine. Analysts warned that it may take years to establish a European credit rating agency.

Austrian Times

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