Italy sees Silvio Berlusconi bow out as all eyes turn to Germany

SILVIO Berlusconi, Italy’s longest serving post-war prime minister, resigned last night, setting in motion a transition aimed at bringing the country back from the brink of economic crisis.

The embattled premier stood down amid jeers from hundreds of protesters who gathered in central Rome to celebrate his departure.

A political era spanning 17 years, at times plagued with scandal, came to an end as Berlusconi left the Chigi Palace last night, moments after President Giorgio Napolitano accepted his resignation.

As he was driven away in an armoured Audi saloon hecklers shouted “buffoon, buffoon” and pelted the vehicle with coins.

His departure came hours after the Chamber of Deputies approved a strict austerity package and prepared to form an emergency government.

Berlusconi, who failed to secure a majority in a crucial vote on Tuesday, had promised to stand down once parliament passed the law, demanded by European partners to restore market confidence in Italy’s strained public finances.

Former European Commissioner Mario Monti is now poised to form a new administration to address a financial crisis which has sent Italy’s borrowing costs to unmanageable levels.

In a show of unity, Berlusconi invited Monti for lunch yesterday, however a number of Berlusconi’s allies remain split on whether or not to support his successor.

Napolitano appealed yesterday for politicians to unite for the good of the country – urging members of Berlusconi’s own party and allied Northern League to co-operate with Monti.

“All political forces must act with a sense of responsibility,” Napolitano said.

But interior minister Roberto Maroni of the Northern League made it clear the party would stand in opposition to any Monti government, refusing to be part of any broad coalition he might try to form.

On Friday, the Italian Senate easily passed the austerity measures, with the parliament giving final approval to a financial stability law yesterday. However, one leading economist warned yesterday that the measures could provoke civil unrest.

Professor Giuseppe Ragusa said the ¤56 billion (£48bn) reform package would hit Italians in the pocket hard – even though most would be glad to see the back of Berlusconi.

Ragusa, who lectures at the Luiss University in Rome, said: “These packages may help the country and it will put political issues to one side but there is a real chance of social turbulence and unrest because Italians will be left very unhappy.

“We will see people on the streets protesting and we will see the scenes that have been played out in Athens and here in Rome twice within the last year on a more regular basis.

“Italian pensions were very generous but these are now being cut and people are going to have to work for longer before they can retire so, of course, they are not going to be very happy.”

Berlusconi’s resignation is an ignoble end for the 75-year-old billionaire media mogul who came to power for the first time in 1994 using a soccer chant, Forza Italia (Go Italy), as the name of his party, and went on to become Italy’s longest serving post-war premier.

But his three stints in the job were tainted by corruption trials and charges that he abused his power to help his business interests. His current term has been marred by sex scandals, “bunga bunga” parties and criminal charges he paid a 17-year-old girl for sex – accusations he denies.

Italy is under intense pressure to quickly put in place a new government that can push through even more painful reforms and austerity measures to deal with its staggering debts, which stand at ¤1.9 trillion, or a huge 120 per cent of output. Italy has to roll over a little more than ¤300 billion of its debts next year alone.

The markets battered Italy last week amid uncertainty that Berlusconi would quit. But Italy’s borrowing rates pulled back after Napolitano made clear he intended to tap the politically neutral economist Monti to try to head an interim government to push the reforms through.

The yield on benchmark Italian ten-year bonds fell to 6.48 per cent on Friday, below the crisis level of 7 per cent reached earlier this week.

Greece, Ireland and Portugal all required bailouts after their own borrowing rates passed 7 per cent. The Italian economy would not be so easy to save. It is worth $2tn, twice as much as the other three combined.