Ireland meets austerity targets by 'healthy margin' as it seeks return to bond markets Mario Monti, the technocrat prime minister of Italy, became the latest leader to criticise the focus on austerity rather than growth. If there is no demand, growth will not materialise. All the reforms we are putting in place now are deflationary," he said. Italy raised €8.5bn of six-month debt at a bond auction - but at average rates of 1.772pc, far higher than the 1.119pc previously. It came as the statistics institute Istat said Italy's business confidence had slipped to a two-year low. Meanwhile, politicians in Holland reached a deal on a budget for 2013, with a proposal which has garnered the support of a parliamentary majority and will reduce the budget deficit so that it meets the EU's strict target of 3pc of GDP. Jan Kees de Jager, the country's finance minister, wrote in a letter to the Dutch parliament: At the request of the Lower House there have been intense discussions with all involved parties to come to a shared programme of additional measures and meet the demands of the excessive deficit procedure. The agreement came after the collapse of Holland's coalition government on Sunday over budget disagreements. Elections have been set for September 12. In France, Nicolas Sarkozy, who is fighting to retain his presidency, declared there was "no turning back" on Europe's target to cut budget deficits. He said the country had managed to cut its deficit faster than expected, without cutting civil servant pay or pension payments. Anlaysts at Danske Bank published an unwelcome forecast of a slump in the French housing market: "We see signs of a bubble in the French housing market and would not be surprised to see French house prices declining 10pc to 20pc in coming years." After a volatile day, European markets closed broadly flat, with the Eurostoxx 50 sliding 0.1pc. Separately, the Chinese Premier warned the global recovery remained uncertain and urged China and Europe to "face challenges together." Concluding a European tour in Poland, Wen Jiabao said that while the outlook had improved since the beginning of the year, the global economy was still fragile. The Prime Minister said China's goal for closer ties with Europe would require mutual respect, adding that China was ready to reduce trade imbalances with eastern and southern Europe.