Italy’s president Giorgio Napolitano has called for immediate measures to combat a “dramatic crisis” after the country’s industrial output fell back to levels reached in 1979.
Mr Napolitano said the hardships faced by the people have become excruciating, and demanded a spate of measures to boost growth and halt the relentless rise in unemployment.
The plea came after fresh data showed industrial production in March fell 7.6pc from a year earlier, dropping for the 15th consecutive month. New orders fell 10pc.
The Istat data agency reported earlier that exports continued to fall in the first three months of the year and are down 6pc since last year, dashing hopes for a trade boost to offset the collapse in internal demand. This is in stark contrast to Spain, where exports have held up well.
Ten of thousands marched in Rome over the weekend to protest austerity measures with placards saying “we can take no more”. They were led by increasingly militant trade unions, left-wing politicians and the Five Star movement of comedian Beppe Grillo, the biggest party in parliament.
Premier Enrico Letta has promised a blitz of measures to cut the 39pc youth unemployment rate, nearer 50pc in much of the South. It is unclear how he can achieve this when Italy is committed to carrying out an “internal devaluation” within the eurozone to regain labour competitiveness lost over the past 15 years.
Mr Letta is already facing difficulties holding together a fractious left-right coalition. His popularity has proved fleeting, with a poll on Friday showing that confidence in his government has dropped from 43pc to 34pc in a month. His Democratic Party is bitterly divided, showing how difficult it will be to deliver on labour market reforms demanded by Brussels.
Mr Letta is repealing a hated property tax on homes, and plans €1bn in measures to help households but this is small beer. He is exploring plans to exempt €10bn in infrastructure projects from the EU’s 3pc deficit target.
The EU expects Italy’s economy to contract by 1.3pc this year, pushing the debt ratio to 131pc of GDP. Many private forecasters fear far worse. Any further slippage could send the debt trajectory beyond the point of no return.