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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Account Manager - Media Sales - £36,000 OTE

£28000 - £36000 per annum: Recruitment Genius: This award-winning company, whi...

Recruitment Genius: C# .NET Developer / Application Support - Junior

£21000 - £25000 per annum: Recruitment Genius: This business has an industry r...

Recruitment Genius: Office Administrator

Negotiable: Recruitment Genius: They make daily deliveries to most foodservice...

Recruitment Genius: Transport Planner

Negotiable: Recruitment Genius: They make daily deliveries to most foodservice...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash