Rome: Italy pledged on Friday to work swiftly for a constitutional amendment requiring the government to balance its budget, as Rome feverishly tried to assure domestic and foreign investors its finances are sound and calm nervous markets in Europe.
Premier Silvio Berlusconi told a hastily convened evening news conference the government will "speed up measures" in its budget law approved last month by Parliament, "with the possibility of reaching a balanced budget by 2013 instead of 2014" as first planned.
His conservative government, now more than three years into its five-year term, will also work to amend the Constitution to include a requirement for a balanced budget, Berlusconi said.
Berlusconi, saying he conferred by phone with world leaders, announced that G-7 finance ministers will meet "within days" about the exploding financial crisis.
Later, his spokesman clarified that convening an "extraordinary meeting" of the G-7 finance ministers was still "at the reflection stage" with no decision yet taken, although Italy favored one.
Concern over the crisis was trans-Atlantic.
US President Barack Obama spoke separately by phone with French President Nicolas Sarkozy and German Chancellor Angela Merkel about the latest developments in Europe's sovereign debt crisis, the White House said.
Berlusconi, in turn, said at the news conference that he was set to speak to Obama later Friday.
The uncertainty stemming from the 17-nation's shared currency - used by some 330 million people across the continent - sent European shares plummetting this week, and was also seen as contributing to sending US stock markets lower.
Italisn Finance Minister Giulio Tremonti, who stood beside Berlusconi, said a balanced budget could be achieved by 2013 by speeding up reform of Italy's extensive, and expensive, social welfare system, which includes national health care and generous retirement payments.
Also key to this goal, Tremonti said, would be what he promised as the "mother of all liberalization," especially in Italy's highly regulated world of labor.
"The principle that all will be allowed unless specifically forbidden" by labor laws will be the guiding principle of the government's strategy, Berlusconi said, vowing that that, too, would be soon enshrined in Italy's constitutional.
Italy's industrialists and mid-sized employers have complained for decades that Italy's strict laws making firing workers almost impossible discourages them from hiring more employees in moments of need.
Further strategy also includes privatization of sectors, which Tremonti didn't specify, and what he said would be a "speeding up" of investment to improve and modernize infrastructure, as a way to wake up Italy's slumbering economy.
Italy's Parliament went on vacation for a month earlier this week, but on Friday, responding to the quickly worsening economic nervousness, officials of the two chambers said key committees would keep working throughout August.
And all the lawmakers were expected to be summoned back to work as soon as the reforms pushed by Berlusconi is ready for a full vote.
Berlusconi's coalition, despite setbacks this year in local elections, has a comfortable majority in parliament assuming his often fickle ally, the Northern League, closes ranks.
The opposition center-left has been clamoring for Berlusconi to step down, insisting he has essentially done nothing in three years to create jobs or lower the tax burden on workers.
Berlusconi's pledges Friday night "are nothing new compared to the paucity of ideas shown by his government in recent months," said Rosy Bindi, an opposition leader.
Italy's borrowing costs rose above Spain's for the first time in more than a year, pushing European leaders to interrupt their vacations and look for a response to deepening fears about the health of the eurozone's number 3 economy.
At the start of Europe's debt crisis 21 months ago, Italy was rarely grouped with the weaker members of the single currency zone, such as Greece, Ireland and Portugal. Many in the markets thought Spain, with its 20 per cent unemployment rate, was vulnerable.
But the emergence of Italy as a potential victim over the past few weeks has highlighted just how vulnerable the eurozone is and how insufficient its anti-crisis measures are.
The yield on Italy's 10-year bond stands at 6.09 per cent, ahead of Spain's equivalent of 6.04 per cent - though both are lower than the euro-era highs earlier in the week and markedly below where they were at the start of the day, they're still not far from the levels that forced Greece, Ireland and Portugal to seek international financial help.
Worries that Italy and Spain maybe next in line led Merkel, vacationing in the Italian Alps, and French President Nicolas Sarkozy, on the French Riviera, to take time from their holidays for a phone conference on the eurozone crisis. Spanish Prime Minister Jose Luis Rodriguez Zapatero spoke with Sarkozy and Berlusconi in separate phone conversations on Friday.
Merkel's office said she spoke with Sarkozy, Berlusconi and British Prime Minister David Cameron.
All agreed that "decisions made by the EU summit on July 21 should be implemented quickly," Merkel's office said in a statement.
At last month's huddle, eurozone leaders agreed to a sweeping deal that will grant Greece a new bailout - but likely make it the first euro country to default - and radically reshape the currency union's rescue fund, allowing it to act pre-emptively when crises build up.
But their options to what a leading EU policymaker described as "incomprehensible" movements in the markets appear limited.
Even a better than expected US jobs report Friday failed to ease the pessimism that has gripped investors over the past few weeks.
It's only been two weeks since eurozone leaders agreed to expand the powers of its euro 440 billion ($623 billion) rescue fund that helped bail out Greece, Ireland and Portugal. The fund will be able to buy governments bonds and bail out banks, but the new powers will not be in place until parliaments approve the changes in September.
Analysts also warn that the fund is currently not big enough to rescue Italy, whose debt amounts to 120 per cent of economic output, around double that of Spain. Only Greece has a bigger proportion to service in the eurozone.
Markets have put increasing pressure on Italy because of its chronically weak growth and a general lack of confidence in Berlusconi's ability or willingness to push through politically difficult measures to make the economy more productive.
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