Monday, 7 November 2011

Clock ticking for Berlusconi

There are rumours swirling around at the moment that Italian Prime Minister Silvio Berlusconi could be on the way out.

According to the FT

Giuliano Ferrara, editor of Il Foglio and a former minister under Mr Berlusconi, said on his newspaper’s website that it was clear that Italy’s prime minister was about to resign. “It is a question of hours, some say of minutes,”

The Italian stockmarket has reacted to the news by climbing rapidly.

With Italian borrowing rates reaching a euro-era high this morning,there are doubts as to whether he commands enough loyalty among lawmakers to ensure the quick passage of deficit reduction legislation,that European and international financial officials say Rome must achieve to avoid falling victim to a dramatic debt crisis like that bringing Greece to its knees.

The PM was forced into asking the International Monetary Fund to monitor the country's reform efforts during last week's G20.

Berlusconi though appears in fighting mood.According to Corriere della Sera

a confident premier claimed that he can still command a parliamentary majority to pass the measures demanded by international bodies, despite announcements of defections in the government coalition: “In the past few hours, I have verified that the numbers in Parliament are secure”. In a telephone link to an Azione Popolare convention organised by Silvano Moffa, Mr Berlusconi said “no one in this Parliament is capable of putting together a credible alternative majority”. The prime minister was unequivocal: “Italy has to face a dual threat from speculation in the markets and from political speculators seeking to use the crisis as a shortcut to power”. He concluded: “That is why I said that our friends who are leaving the majority at this time are enacting a betrayal not of us but of Italy”.

Nevertheless,the yield on the country's ten-year bonds jumped another 0.33 this morning to 6.58 percent, its highest level since the euro was established in 1999 and closer to the 7 percent threshold that has seen Ireland and Portugal accept bailouts.

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