Berlusconi says Italy is sound, but fails to convince the markets

The Italian Prime Minister Silvio Berlusconi broke a rare, month-long silence to address parliament yesterday, hoping to convince the markets that the economy was sound and recovery around the corner.

His intervention came a day after nervous bond markets once again targeted Italy and Spain, driving the cost of government borrowing to record highs. In Italy this came despite an emergency budget rammed through last month with opposition support.

However, Mr Berlusconi yesterday did little to reassure the world that his government has what it takes to lure investors back. "The country is economically and financially solid. In difficult moments, it knows how to stay together and confront difficulties," Mr Berlusconi said.

"The government and parliament will act, I hope, with a large political and social consensus to fight every threat to our financial stability," he said in speech that offered few initiatives, but reannounced some old ones, including a development fund for the economically stagnant south of the country.

James Walston, professor of Italian politics at the American University in Rome, said: "There was nothing new in it. It was very lacklustre and very low key, a tepid soup for a very ill patient."

Former prime minister Lamberto Dini had this week urged Mr Berlusconi to announce something dramatic such as the privatisation of the post office or the abolition of the provincial layer of government, which is widely seen as redundant, to ensure that his intervention made a difference. But there was no hint of fresh thinking in the speech. Nor did he offer to resign.

He reminded MPs that the level of saving of Italian families was the second highest in Europe, claimed that the government had done much to balance the budget while admitting that there was still much to be done.

He promised symbolic action on politicians' privileges which have infuriated the public as deep cuts are forced on them. But he did nothing to address the markets' main reason for scepticism about last month's budget: the fact that most of the promised measures are only supposed to take effect after his government leaves office in 2013 – the equivalent of promising moonshine.

The slump in value of Italian government bonds on Tuesday, raising yields on 10-year bonds above 6 per cent was reflected in the worst performance by the Milan stock exchange for two years.

The government's position has been further weakened by corruption allegations surrounding Giulio Tremonti, the Finance Minister long seen as Mr Berlusconi's strongest weapon in the war against sceptical markets.

The reaction of the markets to Italy's situation was "absolutely excessive," Mr Berlusconi insisted. "This is not an Italian crisis," he insisted, "but a planetary one... We will not follow the nervousness of the markets."

And he could not resist introducing a personal note. "You are listening," he said near the end of the 35-minute speech, "to an entrepreneur who has three companies quoted on the stock exchange. I am myself in the trenches."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Account Manager

£20000 - £35000 per annum: Recruitment Genius: This full service social media ...

Recruitment Genius: Data Analyst - Online Marketing

£24000 - £35000 per annum: Recruitment Genius: We are 'Changemakers in retail'...

Austen Lloyd: Senior Residential Conveyancer

Very Competitive: Austen Lloyd: Senior Conveyancer - South West We are see...

Austen Lloyd: Residential / Commercial Property Solicitor

Excellent Salary: Austen Lloyd: DORSET MARKET TOWN - SENIOR PROPERTY SOLICITOR...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there