hurricanemaxi
Joined: 04 Nov 2011
Posts: 120
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 Posted: Wed Nov 09, 2011 9:01 am Post subject: Italy’s Focus Shifts to Forming New Government |
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Prime Minister Silvio Berlusconi’s offer to resign leaves Italy struggling to produce a new regime stable enough to implement painful austerity measures in a country that has averaged almost a government a year since World War II.
Berlusconi last night said he’d step down as soon as parliament passed cost-cutting steps pledged to European Union allies in a bid to convince investors Italy can curb record borrowing costs. The text of the measures, which the government has yet to present, is due to be approved by parliament in the coming weeks.
The euro strengthened and U.S. stocks rose for a second day after the premier’s announcement, bolstering optimism a new leader will better be able to tame the euro-region’s second- biggest debt. Europe’s inability to contain the sovereign crisis led to a surge in Italian bond yields in recent weeks that further frayed Berlusconi’s fractious coalition.
“While the news could set a positive market tone, that could be short lived,” said Silvio Peruzzo, euro-area economist at Royal Bank of Scotland Group Plc. “Investors will look at the post-Berlusconi and see an option on two outcomes: new elections and a technocratic government. We believe the latter would be strongly preferred and could help the crisis resolution process in Europe.”
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