MILAN TURMOIL:ITALIAN PRIME minister Silvio Berlusconi came under renewed pressure to resign last night after another turbulent day of trading resulted in heavy losses on the Milan stock exchange.
The centre-left opposition Democratic Party (PD) called on Italian president Giorgio Napolitano to appoint an “emergency government”. At a meeting with the president, PD leader Pier Luigi Bersani argued that in view of tomorrow’s G20 summit in Cannes, Italy urgently needed a change of “political scenario”.
“We reiterated our conviction that it is an urgent necessity, a question of minutes, that there be a change of political scenario in order to withstand the coming storm,” said senior PD figure Enrico Letta. “Italy is not ready for the storm . . . and . . . simply cannot turn up at the G20 Cannes summit without a change in the political situation, without having formed an emergency government.”
A statement from the Confederation of Italian Industry, the Co-op Alliance and the Association of Italian Bankers called on Mr Berlusconi to hastily approve those measures promised at last week’s EU summit or “otherwise, draw the conclusions and do it quickly, in the interests of Italy”. Arguing that Italy is “on the precipice” and that the current situation is “unsustainable”, the note concludes by saying that “time has run out, the damages are already immense”.
Later in the day, Mr Napolitano issued a statement in which he confirmed that “at this critical moment, the country can count on a broad swathe of social and political forces all too keenly aware of the need for a new perspective”, which would come together to make “those choices which the EU, international opinion and market operators urgently expect of Italy”.
Mr Napolitano stopped short of saying he was urging the formation of an “institutional” government but his remarks were the strongest indication yet that he may be in favour of such a move.
The pressure from the opposition and the industrialists came after a day when Italy was in the firing line on the bond markets, in the wake of the surprise Greek government decision to hold a referendum on the austerity measures called for by the EU.
By the end of the day’s trading, Italy’s benchmark 10-year bond yield had risen to 6.19 per cent, representing a “spread” of 442 points, while on the Milan stock exchange the benchmark FTSE Mib index suffered its worst day in three years, closing down 6.8 per cent.
One of the alarm bells that prompted calls for Mr Berlusconi’s resignation was that the 10-year bond yield seems to be creeping closer to the 6.5-7 per cent mark usually considered unsustainable by analysts. “The markets don’t trust Berlusconi and how could you blame them?” said senior Italy of Values figure Italo Bocchino.