Italy agrees £43bn cuts package

Italy has backed a €70 billion (£43 billion) austerity package - a move considered crucial to stopping the eurozone's third-largest economy from succumbing to the debt crisis.

Premier Silvio Berlusconi's government fast-tracked approval of the package measures and increased their scope after markets plummeted this week on worries over Italy's financial stability.

The lower house passed the measures by a vote of 314-280, following the passage earlier in the afternoon of a confidence vote in Premier Silvio Berlusconi's government. The package was approved by the Senate on Thursday.

Berlusconi's government fast-tracked approval of the package measures - initially set for later this summer - and increased their scope after markets plummeted this week on worries over Italy's financial stability.

The measures were approved as five Italian banks announced they had passed European stress tests. Both moves came after the markets closed, so their impact on the markets can only be measured next week.

Berlusconi, who remains under pressure from the opposition to resign, even showed up today for a vote of confidence tied to the austerity package - easily won by his government.

He has been criticised for remaining out of the public eye at a time of crisis. This was his first public appearance in about a week.

"I've not been absent or missing," Berlusconi said. "On the contrary, these past days I've read all the documents, I've worked for the good of Italians."

Opposition lawmakers maintain the government is too weak and divided to handle the financial turmoil, and should just give up.

Market fears grew this week that the financial crisis engulfing Greece, Ireland and Portugal might spread to Italy, a country marked by high debt and low growth, and far too expensive for Europe to rescue.

Italy's debt is among the highest in the eurozone at nearly 120 % of GDP, but poor growth is viewed by many as the overriding issue.

The austerity package seeks to balance the budget by 2014.

It includes increases in health-care fees, cuts to tax breaks and high-end pensions, raises in the retirement age and public-sector salary freezes. The government is also looking into privatising state-owned companies such as the state railway or postal services once the crisis eases.