Enforced austerity measures will only restrict economic growth and lead to a further rise in unemployment. Coupled with an expected increase in taxes, these policies are deflationary.
The resultant decrease in consumer spending, especially if coinciding with a decline in asset prices (ie. property & stocks) if the debt crisis escalates, would further intensify the deflation.
But in the meantime, Monti not only has to get the austerity measures past the Italian parliament, he must get them past the people. And with social mood in decline that will be the real challenge.
