Andrew Medichini/Associated Press
Italy's prime minister, Silvio Berlusconi, right, and the country's economy minister, Giulio Tremonti. "We have to recognize that the world has entered a global financial crisis that concerns all countries," Mr. Berlusconi said Friday.
The Italian prime minister, Silvio Berlusconi, whose nation has been viewed as the next potential debt-laden domino to fall, also announced a number of measures Italy would take to restore the confidence of investors and creditors.
The G-7 meeting is meant to show that leaders are taking action to address the crisis, even before votes occur in national parliaments next month to expand Europe’s rescue fund for its most financially troubled members.
While no details of the meeting’s agenda were given, the situation “requires coordinated action,” Mr. Berlusconi said. “We have to recognize that the world has entered a global financial crisis that concerns all countries.”
For all the hum of activity on Friday, though, many economists and analysts remained unconvinced that sufficient steps were being taken to resolve the problems engulfing the European nations that share the euro.
European stocks were down for a second consecutive day on Friday, on the gnawing realization that Europe and the United States may face fundamental economic problems for years to come.
The turmoil prompted a flurry of phone calls between President Nicolas Sarkozy of France from his vacation retreat on the French Riviera, and Chancellor Angela Merkel of Germany, who had chosen an August getaway to Italy. Mrs. Merkel and Mr. Sarkozy also each spoke with President Obama on Friday, the White House said, but offered no details on their discussions.
Mr. Berlusconi, meanwhile, spoke by phone Friday with Mrs. Merkel and, separately, with Herman Van Rompuy, the European Council president, and with José Luis Rodríguez Zapatero of
Spain — the other big debt-saddled European country that, like Italy, is seen as teetering.
Mr. Zapatero of Spain, whose economy is in greater peril as investors drive up borrowing costs, also spoke separately to both Mr. Sarkozy and Mrs. Merkel from his vacation in Andalucia.
At a hastily called news conference, Mr. Berlusconi, who has been criticized for being too slow to recognize that Italy’s debt problems threaten the euro union, said his country would take various steps to address the crisis.
He said Italy would aim for a balanced budget a year earlier than a previously stated 2013 deadline, seek a constitutional balanced-budget amendment and make other moves to liberalize the nation’s economy — which is so sclerotic from bureaucratic rules that it has barely grown for a decade.
Parliament may shorten its August recess to pass the measures, Mr. Berlusconi said. He appeared alongside the economy minister, Giulio Tremonti, whom Mr. Berlusconi had recently treated with public disdain that added to the market’s concerns about Italy.
Many analysts remain skeptical that European leaders have grasped the problems confronting them.
“Politicians have done everything to demonstrate they are not ahead of the curve,” said Stefan Schneider, the chief international economist at Deutsche Bank in Frankfurt. “That is hitting market confidence and creating a self-fulfilling feedback loop.”
Just days after Washington struck a harrowing, last-minute deal to lift America’s
debt ceiling, a stark reality has come crashing in on both sides of the Atlantic. Neither the United States nor Europe has yet fully recovered from the financial crisis that spread from spring 2007 through early 2009.
Instead, brief bright spots of recovery have been overshadowed by rising unemployment and anemic economies, especially as debt-reduction austerity programs in Europe and spending cuts in the United States weigh on growth.
Signs of economic weakness continue to emerge. New data indicates that industrial output fell in June in Italy and Spain, and both economies grew at a tepid pace in the second quarter. While the German economy remained strong, industrial production there slid in June, by 1.1 percent, as construction activity also slackened.
Meanwhile, leaders in Brussels on Friday were trying undo the damage wrought by José Manuel Barroso, the European Commission president, a day after he frightened investors by conceding that Europe was gripped by political paralysis.
Times Roundtable on the Week's Economic News
