SILVIO BERLUSCONI WILL resign as Italian prime minister in the coming weeks but what the political future holds for the debt-laden eurozone nation is far from clear.
The charismatic 75-year-old last night pledged to resign after his proposed austerity measures are voted through the upper house, the senate, which could take up to 15 days.
Italy has struggled under the weight of an estimated €1.9 trillion of debt and growing uncertainty over its ability to repay this debt. It is the latest eurozone nation to come under such pressure with its cost of borrowing rising to levels close to where Greece, Ireland and Portugal required international assistance.
Berlusconi’s resignation appeared inevitable after a crucial budget measure passed through Italy’s chamber of deputies but he lost his parliamentary majority with a number of defections from his party.
The markets reacted positively to the news of Berlusconi’s demise, with European shares closing up and markets in Asia reacting positively to the news overnight.
Analysts will again be watching the cost of borrowing for Italy when the markets re-open in Europe today.
The Guardian reports that opposition leaders are warning that Berlusconi could re-emerge just as he did in 2008 when he returned to office for a third term as prime minister.
The response of the opposition ranged from those who noted Berlusconi had “not disappeared” but only resigned to those who claimed he would use the coming weeks to “buy a few [parliamentarians]“.
But Reuters reports this morning that Berlusconi has said he will not run for office in the next elections.
Italy could form a government made up of technocrats which could see it through the current crisis or it could call elections now, something both Berlusconi and coalition partner Umberto Bossi would be keen for given it could ensure their right leaning parties remain in power.
A protracted election campaign will not please the markets and will add to the uncertainty across the eurozone. Election campaigns in Italy can last as long as 60 days.
Reuters reports that Italy’s president Giorgio Napolitano will start consultations with all political parties after the budget measures pass to decide the country’s next step.
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