Eurozone majors move swiftly to cut deficit

PARIS: France and Italy, the eurozone’s second and third-largest economies, were hurriedly preparing deficit-cutting measures yesterday amid renewed concerns that debt burdens may sink the single currency.

Italian lawmakers were set to discuss a constitutional amendment on a balanced budget, while the both the Italian and French grovernments were hurriedly preparing new deficit cutting measures to be adopted within days.

A relief rally on the United States Federal Reserve saying it would likely keep interest rates at ultra-low levels for the next two years quickly faded on Wednesday and the European and US markets fell sharply. Pressure from the markets and the European Central Bank has seen a redoubling of deficit cutting efforts as the debt crisis that has hit Greece, Ireland and Portugal threatens to ensnare core eurozone countries.

On Wednesday, French President Nicolas Sarkozy cut short his holiday to announce new moves to slash France’s deficit and the country was hit by rumours it might be next after the US to lose its top triple-A credit rating.

Sarkozy gave his finance and budget ministers one week to come up with new ideas for keeping France’s promises to slash its public deficit, with the measures to be decided upon on Aug 24.

Meanwhile, France’s AAA sovereign rating was affirmed by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings. – AFP