Italian Prime Minister Snipes at Merkel

Excessive austerity in countries with economic woes is not only causing those countries to resent more prosperous nations insisting on cuts and sanctions, but also stands a strong chance of hobbling any chance of economic growth in debt-ridden countries so that they cannot recover. Merkel, at the behest of the Bundesbank, has been insistent on the need for countries to tighten their belts and reform their economies.

“To help European construction evolve in a way that unites, not divides,” Monti said in the report, “we cannot afford that the crisis in the euro zone brings us … the risk of conflicts between the virtuous North and an allegedly vicious South.”

On Wednesday, the head of Italy’s largest labor federation CGIL said that the country is risking a “social explosion” over austerity measures, and that the nation’s unions plan further protests against such measures. Unions are not the only ones worried about the effects of so much cost-cutting. The employers’ lobby Confindustria slashed its 2012 GDP forecast on Thursday from a previous estimate for growth of 0.2%, instead projecting a contraction of 1.6% and warning that the new estimate was optimistic, and contingent on a gradual easing of the debt crisis in the euro zone.