The letter written by Trichet and Draghi to the Prime Minister deals with the necessity for some urgent reforms aiming at reaching a balanced budget in 2013.
The Governing Council considers essential that the investors restore their financial confidence and in order to do so the Italian authorities should start some pressing actions.
First of all the growth should be enhanced by means of an increase in competition, especially in services and of a support of competitiveness and efficiency.
For example the authors suggest a full liberalization of local public services, a reform of the collective wage bargaining system and a review of the rules regulating the hiring and dismissal of employees along with establishment of an unemployment insurance system and of a set of active labour market policies.
Secondly the governments need to take immediate and bold measures to ensure the sustainability of public finances. For example additional-corrective fiscal measure are needed to achieve a better fiscal deficit in 2011 a net borrowing of 1% in 2012 and a balanced budget in 2013.
Moreover the authors think that it is possible to further intervene in the pension system, to reduce the cost of public employees, to strengthen the turnover rules also reducing wages if necessary.
Other measures that could be taken are an automatic deficit reducing clause and the control of the borrowing.
Then the authors believe that to improve administrative efficiency and business friendliness the government as to take measures to ensure a major overhaul of the public administration through the use of performance indicators will take all the appropriate actions to restore the confidence of the investors and in their opinion all these actions should be taken as soon as possible with decree-lows followed by Parliamentary ratification.