Italy faces general strike fear over cuts

The move came amid mounting criticism of the 45.5 billion euro (£39.8bn) package passed on Friday in response to demands by the European Central Bank (ECB).

Critics say the package – a mix of spending cuts, job cuts and tax increases – will strangle Italy’s stagnant economy, which is now expected to grow by only about one per cent this year.

Other critics, including nine members of Berlusconi’s own coalition, say it unfairly targets the middle class and fails to tackle Italy’s massive tax evasion problem.

Susanna Camusso, leader of the CGIL labour union, criticised measures aimed at the labour market and pension system, saying a strike is the only way to “change the inequity of this package”.

She told the La Repubblica newspaper that union officials will meet on August 23 to set a strike date and invited other unions to join.

The new measures include 20 billion euro (£17.5bn) in cuts and tax rises for 2012 and 25.5 billion euro (£22.3bn) for 2013.

Citizens face a five per cent additional tax on income above 90,000 euro (£78,000) and a 10 per cent additional tax on income above 150,000 euro (£131,000) for the next three years.

Both Berlusconi and finance minister Giulio Tremonti have defended the government’s actions.

Tremonti insisted the debt crisis could not have been predicted but said it could have been avoided with the creation of Eurobonds, a new joint bond backed by all 17 countries using the euro.

Berlusconi called Italy’s new austerity measures fair and said they had won praise from the ECB and leaders including German Chancellor Angela Merkel.

European Union president Herman Van Rompuy said the measures were “crucially important” not just for Italy, the eurozone’s third largest economy, but for all of Europe.