Berlusconi’s high-stakes battle with coalition partners leaves EU grand plan in jeopardy

The Italian government and a broad plan to save the euro were both at risk last night, with premier Silvio Berlusconi locked in a high-stakes battle with coalition partners to muster support for emergency growth measures demanded by the European Union.

Markets are looking to the EU’s grand plan – promised in time for an EU summit tomorrow – for a turnaround in the debt crisis that will avert a potential global recession.

But the plan risked being delayed yet again, as governments failed to agree on details.

Mr Berlusconi’s government, meanwhile, showed little sign of meeting the EU’s demands for reforms, a prerequisite for the grand plan to go ahead.

The summit of EU leaders, meant to be a confidence-building day, risked going down as another failure in Europe’s fight to stem its two-year-long debt crisis.

EU officials say they will not present their comprehensive plan if Italy doesn’t agree to new economic measures they demanded on Sunday.

But Mr Berlusconi has been unable to get his key ally in parliament, the Northern League, to accept an increase in the pension age. The Northern League says it will alienate its constituency of workers in the productive north.

Party leader Umberto Bossi conceded that the government was at risk.

“Let’s say the situation is difficult, very dangerous,” Mr Bossi said.

TOM PETERKIN