Monti wins vote, says not in despair about Italy

Italy's Prime Minister Mario Monti gestures during a news conference at Chigi Palace in Rome December 15, 2011.

ROME (Reuters) - Italian Prime Minister Mario Monti, boosted by a parliamentary confidence vote on his tough austerity package, said on Friday he was "absolutely not in despair" about Italy's prospects of getting out of its debt crisis.

Speaking in a mostly impromptu address to the lower house, Monti also said he hoped the 33 billion euro package would be the "last sacrifice" Italians would have to bear.

Italian media had quoted Monti's predecessor, Silvio Berlusconi, as saying that Monti was "in despair".

But Monti, head of a technocrat government installed last month in an effort to reassure markets that Italy can manage its debt mountain, spoke after parliament voted on individual parts of the package to say: "I am absolutely not in despair."

He said many of the reforms were structural and would help future financial stability, but added that Italy needed more measures to liberalise the economy and reform the labour market.

Hours earlier, his sweeping measures, aimed at saving the euro zone's third-largest economy from financial disaster, were approved in a vote of confidence by 495 votes to 88.

The collapse of investors' confidence during the summer under Berlusconi's government thrust Italy to the centre of the euro zone debt crisis and pushed its borrowing costs to untenable levels on bond markets.

Hours after the confidence vote, its problems were highlighted again when the ratings agency Fitch placed Italy and five other euro zone countries on a downgrade warning in the absence of a "comprehensive solution" to the debt crisis.

The austerity plan, challenged by Italy's unions and the opposition Northern League, has been in effect since Monti's government approved it on December 4, but needed full parliamentary approval within 60 days.

The upper house, where Monti is a life senator, is expected to give final approval to the package next week, most likely in another confidence vote.

Monti, a former European commissioner, called the vote in the lower house to speed the package through parliament and avoid debate on dozens of amendments, mostly tabled by the League, which has tried to obstruct the measures.

AIM FOR BALANCED BUDGET

The package, which has been hailed by Italy's European Union partners, will cut public spending, raise taxes and reform pensions in a bid to restore market confidence in Italy's finances and balance its budget by 2013.

While Monti has seen his popularity slip slightly in opinion polls since he formed his government nearly one month ago, his overall support in parliament is strong.

The two biggest groups, Berlusconi's centre-right People of Freedom Party and the centre-left Democratic Party PD.L, support the government, although both want it to soften the plan's impact on their core supporters.

Both parties know they cannot sabotage the government despite their misgivings without risking an economic catastrophe that would probably lead to a sovereign default and destroy the euro currency.

"We would have wanted more but we will continue our battle ... to support those who don't have a voice," Dario Franceschini, lower house PD leader, said in his pre-vote address to parliament.

"This is just the beginning. Our aim is to save our country."

PDL parliamentary leader Fabrizio Cichitto, speaking with Berlusconi sitting next to him in the cramped party benches instead of on the government dais he occupied until last month, said: "We are entering a recession and we realise this calls for extraordinary measures".

But Cichitto asked Monti to introduce more measures to stimulate growth and called some of his proposals to liberalise closed professions "Stalinist-style".

Pressure from the centre-right has forced Monti to delay plans to liberalise some sectors, such as pharmacies, taxis, lawyers and notaries, which are still protected by unions and guilds who want to keep their numbers low.

(Reporting By Philip Pullella; Editing by Kevin Liffey)