Italy turned the page on Sunday after Silvio Berlusconi’s resignation, with ex-European commissioner Mario Monti set to take over to try and avert bankruptcy for eurozone’s third-largest economy.
The 68-year-old economist was set to be nominated to lead a technocratic government, once Italy’s president completes a marathon round of formal consultations with political leaders due to end at 1700 GMT. President Giorgio Napolitano is racing against time to have a new government in place by the time financial markets open on Monday, when Italy will face the first bond auction test of the post-Berlusconi era. Berlusconi submitted his resignation to Napolitano on Saturday, triggering an explosion of joy in the streets of Rome with people uncorking bottles of champagne, dancing in the streets and honking car horns. A scandal-tainted, larger-than-life billionaire who has been in power for 10 of the past 17 years, Berlusconi looked visibly shocked as he quit power and said he was “deeply embittered” at the scenes of jubilation. “We’re all delighted. We’ve had enough of this person who always acted in his own interests. Italy is headed for a better future,” said 50-year-old Tommaso Romito, one of thousands celebrating in Rome on Saturday.
After Rome partied over his departure, a handful of supporters of Berlusconi’s People of Freedom (PDL) party rallied outside his Rome residence on Sunday, saying: “Thank you prime minister”. But Italian were overwhelmingly relieved about the exit of a prime minister whose latest popularity poll gave him just 22 percent approval and whose rule was increasingly clouded by sex scandals and legal troubles.
International leaders have pushed hard for Italy to move quickly to form a new government and adopt economic reforms to stave off bankruptcy, after Italian borrowing costs hit alarming record highs. “There is still work to be done in the broader European community to provide markets a strong assurance that countries like Italy will be able to finance their debt,” US President Barack Obama said Sunday.
The European Union, which together with the International Monetary Fund is now auditing Italy’s accounts, has said the country may need to pass extra austerity measures in order to meet its economic targets. Italy’s parliament moved exceptionally fast to approve a package of reforms this weekend that Berlusconi had promised to the European Union and whose approval he had set as a precondition for stepping down. The measures include state asset sell-offs, new infrastructure projects and pro-business incentives but not a long-promised reform to ease firing from long-term contracts that has infuriated trade unions. Following Berlusconi’s announcement that he would resign, Italy’s long-term borrowing costs had risen above 7.0 percent – a dangerous level that could make the country’s debt unsustainable within months. The IMF and the European Financial Stability Facility have both reportedly offered financial help. Some economists however have warned that, unlike fellow eurozone members Greece, Ireland and Portugal, Italy may be “too big to bail”.
