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Chairman and CEO of Chrysler Group Sergio Marchionne speaks during a press conference announcing a $500-million investment in the complex at the Toledo Assembly Complex on November 16, 2011 in Toledo, Ohio. (J.D. Pooley/Getty Images)
Chairman and CEO of Chrysler Group Sergio Marchionne speaks during a press conference announcing a $500-million investment in the complex at the Toledo Assembly Complex on November 16, 2011 in Toledo, Ohio. (J.D. Pooley/Getty Images)

Marchionne feels Italy is 'on the mend' Add to ...

Goldman Sachs’s top economist and the CEO of one of the world’s largest auto groups both said they were cautiously optimistic about Italy surviving the debt crisis even thought its bond yields are trading at distress levels.

Speaking in London at the annual Confederation of British Industry conference, Sergio Marchionne, the CEO of Fiat and Chrysler, said he is in full support of the new technical government of prime minister Mario Monti and believes his predecessor, Silvio Berlusconi, will not spoil Mr. Monti’s plans to carry out his mandate.

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“Italy has a once-in-a lifetime opportunity to abandon the notion of an entitlement society,” he said in a speech Monday morning. “I think Italy is on the mend.”

Mr. Monti unveiled his unelected cabinet last week in Rome and vowed to stabilize the debt, bring down the budget deficit and use economic reform to make the perennially sluggish economy more competitive and generate jobs. His goal is to keep the technical government intact until 2013, followed by a general election.

“Berlusconi will find it hard to make a comeback,” Mr. Marchionne later told reporters, predicting that Mr. Berlusconi’s Popolo della Liberta party will lose strength now that he has resigned. “I sincerely hope that [Mr. Monti] will last until 2013.”

In a separate speech, economist Jim O’Neill, who is chairman of Goldman Sachs Asset Management, noted that Italy cannot be written off as competitive economic power. “Northern Italy has areas of competitiveness that are just as competitive as Germany and France,” he said.

He noted, however, that Italian bond yields in the 6 per cent to 7 per cent range are unsustainable and that the euro “has some serious challenges” unless those rates come down. “We have go to the point where some big decisions have to be made quickly,” he said.

Yields on Italian 10-year bonds have almost tripled since early last year, when they were roughly equivalent to Britain’s yields. The soaring yields created a confidence crisis that ultimately led to Mr. Berlusconi’s resignation to make way for the technical government of Mr. Monti, an economist and former European Commissioner.

Separately, Mr. Marchionne said that Fiat and Chrysler will together produce 4.2-million cars this year, rising to six million by 2014. He reiterated his old forecast that only five or six auto makers will survive and that success will require each of them to make no fewer than six million vehicles a year.

Fiat is the majority shareholder of Chrsyler. Fiat is not profitable in its home market, Italy. Mr. Marchionne said Chrysler’s operating profit is now better than Fiat’s.

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