The new Italian prime minster Enrico Letta has warned that the country faces a “serious economic situation" at the opening of talks designed to resolve economic difficulties.

With the expectation of an increasing number of bad debts across the country during 2013, Italy is struggling to take measures to halt its shrinking economy.

The conference meeting today is designed to stimulate economic recovery with plans to reduce tax on workers and young people.

The prime minister said that: “We will die of fiscal consolidation alone, growth policies cannot wait any longer.” He is expected to travel to various EU capitals including Paris and Berlin during this week as the country seeks to encourage development aid from the EU.

Markets in Italy have reacted positively to the day’s meetings, with a 1.4 percent rise in the Italian FTSE MIB, as the new government raises market confidence from renewed stability.

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