Political crisis threatens Italy’s economy

ROME — Embattled Italian Prime Minister Silvio Berlusconi warned on Saturday that a full-blown political crisis would undermine financial markets’ confidence in the country’s economy.

By Afp

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Published: Sat 11 Sep 2010, 5:46 PM

Last updated: Mon 6 Apr 2015, 11:49 AM

‘We risk losing trust, even partially, on the markets,’ Berlusconi said in a telephone message addressed to a workshop organised by his People of Freedom party (PDL) in the central Italian town of Gubbio.

Berlusconi said there was ‘no alternative’ to his government and that he would not let the country ‘accelerate towards a political crisis, with Italy hanging between early elections and a puny technical government.’

Italy has been in political turmoil since Gianfranco Fini, the lower house speaker and a long-time ally of Berlusconi turned foe, put an end to the prime minister’s once-comfortable parliamentary majority by creating a splinter group in July.

But after months of uncertainty and bitter political warfare, many representatives of Berlusconi’s camp this week stopped calling for early elections and said the government would find a way to survive until the end of its term in 2013.

In July, Italian lawmakers passed a two-year austerity package worth some 25 billion euros (32 billion dollars) in a bid to clean up the public finances and reassure financial markets.

‘With the July package we reassured markets. It would be a crime to jeopardize all the good things we have done,’ Berlusconi said.

‘We have billions of euros in securities to place. We have 56 billion euros (71 billion dollars) to place in September,’ Berlusconi said, referring to the bonds Italy needs to sell in order to finance its huge public debt.

The measures taken in July are aimed at bringing the public deficit down to 2.7 percent of gross domestic product by 2012, putting the budget shortfall within the EU limit of three percent.

Last year, the deficit stood at 5.3 percent of GDP.

Italy’s public debt last year was equal to 115.8 percent of GDP, one of the highest among rich countries, and it is forecast to hit 118.4 percent this year.

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