Italy's Senate passes economic reforms
Source: Agencies |
November 12, 2011, Saturday
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ITALY'S Senate approved economic reforms intended to reverse a collapse of market confidence yesterday, kicking off a rapid transition that will end the Berlusconi era and clear the way for an emergency government within days.
The package of austerity measures demanded by the European Union will now go to the lower house which is expected to approve it today, triggering the resignation of Prime Minister Silvio Berlusconi.
Italian bond yields, which raced way above sustainable levels earlier this week because of political uncertainty, fell sharply yesterday in response to acceleration both of Berlusconi's resignation and the approval of the reforms.
Former European Commissioner Mario Monti, who is expected to replace Berlusconi by Monday, was applauded when he took his place in the upper house for the vote after being appointed a Senator for life by President Giorgio Napolitano.
The appointment, transforming Monti from academic to legislator, was seen as clear confirmation that he will be asked to head a largely technocratic government to push through reforms in an effort to head off a perilous crisis.
With Italy, the eurozone's third largest economy, teetering close to losing control of its towering public debt, global financial markets have been panicked by the weeks of political uncertainty in Italy and the country's borrowing costs rocketed above sustainable levels on Wednesday.
Deeply alarmed by the crisis, Napolitano banged heads to overcome political infighting and get a new government in place within days.
Analysts say Monti could face an uphill battle implementing unpopular reforms with strong opposition expected from some political groups on both left and right. They said even if he was successful this would not necessarily restore investor confidence in the country.
"The markets are clutching at straws of hope in Italy. Technocracy should not be seen as a panacea for Italy's ills," said Nicholas Spiro, head of Spiro Sovereign Strategy in London.
The package of austerity measures demanded by the European Union will now go to the lower house which is expected to approve it today, triggering the resignation of Prime Minister Silvio Berlusconi.
Italian bond yields, which raced way above sustainable levels earlier this week because of political uncertainty, fell sharply yesterday in response to acceleration both of Berlusconi's resignation and the approval of the reforms.
Former European Commissioner Mario Monti, who is expected to replace Berlusconi by Monday, was applauded when he took his place in the upper house for the vote after being appointed a Senator for life by President Giorgio Napolitano.
The appointment, transforming Monti from academic to legislator, was seen as clear confirmation that he will be asked to head a largely technocratic government to push through reforms in an effort to head off a perilous crisis.
With Italy, the eurozone's third largest economy, teetering close to losing control of its towering public debt, global financial markets have been panicked by the weeks of political uncertainty in Italy and the country's borrowing costs rocketed above sustainable levels on Wednesday.
Deeply alarmed by the crisis, Napolitano banged heads to overcome political infighting and get a new government in place within days.
Analysts say Monti could face an uphill battle implementing unpopular reforms with strong opposition expected from some political groups on both left and right. They said even if he was successful this would not necessarily restore investor confidence in the country.
"The markets are clutching at straws of hope in Italy. Technocracy should not be seen as a panacea for Italy's ills," said Nicholas Spiro, head of Spiro Sovereign Strategy in London.
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