Italy’s Monti Worried About Contagion From Spain

“Italian Prime Minister Mario Monti expressed concern about Spain’s public finances on Saturday, and said it would not take much to reignite the euro zone debt crisis and revive the risk of it spreading to Italy.

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Speaking at a conference by Lake Como where he was discussing the Italian government’s new labor reforms, Monti praised Spain’s efforts to reform its jobs market but said it had fallen behind on budget control.

Spain shocked markets last month when it said it had missed its 2011 budget deficit target and a few days later set itself a softer goal for 2012.

“It (Spain) certainly made profound reform of the labor market, but it did not pay the same attention to public finances,” Monti said. “This is causing us big concern because their yields are rising and it wouldn’t take much to recreate trends that could spread to us through contagion.”

He added that any fresh eruption of the euro zone sovereign debt crisis could cancel out the progress made in Italy and “take us back months.”

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