Silvio Berlusconi decided to address both houses of parliament on Wednesday, in an attempt to calm fears that Italy could be dragged into a Greek-style financial crisis.
The Italian parliament approved a 43 billion euro austerity package last month, but Berlusconi said there will be more reforms. He went on to insist that Italy’s banks and political system are rock solid.
“Italy has to face up to this crisis with strength and coherence”, he said “and without reacting to or feeding the neuroses of the market. Our economy is fundamentally solid.”
The speech to parliament comes after heavy losses on the stock exchange in Milan and a sharp rise in yields on Italian bonds.
Yields on Italian and Spanish ten year bonds reached new highs, topping six percent.
Italy’s national debt is 120 per cent of GDP. Any rise in the cost of borrowing will put economic stability at risk.