Italy awaits market reaction to weekend upheaval

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Italy awaits market reaction to weekend upheaval

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Financial markets will have their say on Italy’s latest political upheaval that has been simmering over the weekend.

Months of growing confidence have been thrown into question with the surprise announcement that Prime Minister Mario Monti intends to step down early, possibly before Christmas.

Shortly after he took over last year, Italy had to pay more than seven and a half per cent to borrow over ten years – that was a record.

Now that is down to four and half per cent, but it has been creeping back up ever since Silvio Berlusconi’s PDL party withdrew its support from the coalition.

Party leader Angelino Alfano said: “We continue to express our appreciation for Prime Minister Monti. But we reported Italians’ unease, especially about economic policy. We do not accept accusations of irresponsibility because we will vote for the budget.”

Berlusconi, who left such a mess for his successor last year, has said he will stand again. Monti’s tough love economics has not been universally welcomed.

Rome resident Roberto Tasca said: “(Monti has) brought the economy to a standstill and as a consequence all families are in crisis. I think we need something new. But obviously now the problem will be for whoever comes next.”

Fellow Roman Ettore Vannucci countered: “(Berlusconi) can only hurt Italy. When you see how we still accept certain things, and that people that still follow him and believe him, it’s unbelievable that people still believe in fairytales.”

Stepping down once the budget is approved will only shave a matter of weeks from Monti’s original term. With Berlusconi’s party trailing in the polls, there has already been speculation that Monti himself might stand.