Italian MPs have narrowly backed Prime Minister Silvio Berlusconi’s austerity plan, aimed at putting the brakes on a debt crisis threatening to tear apart the euro zone.
They voted by a majority of 14 – 316 to 302 – in favour of the plan worth 54 billion euros.
The much-altered measures were passed by the Senate on Tuesday; they are now set to become law.
The mix of tax hikes and spending cuts is aimed at balancing the budget by 2013. The European Central Bank had demanded that Italy cut its massive public debt of 1.9 trillion euros.
The vote had been seen as a test for Silvio Berlusconi’s leadership. It effectively became a vote of confidence in the government, which said it would resign if it lost.
It has survived, but only after exposing deep divisions in Berlusconi’s coalition.
The focus will now shift to whether his weak administration can push through promised reforms.
Financial markets have turned on Italy over the summer amid doubts over its economy and ability to tackle its debt mountain.