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."

News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Richard Dawkins dedicated his book 'The Greatest Show on Earth' to Josh Timonen
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Extras
indybest
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

C# .NET Software Developer (Client-Side, SQL, VB6, WinForms)

Negotiable: Harrington Starr: C# .NET Software Developer (Client-Side, SQL, VB...

C# Developer (Genetic Algorithms, .NET 4.5, TDD, SQL, AI)

£40000 - £60000 per annum + Benefits + Bonus: Harrington Starr: C# Developer (...

C# Full Stack Developer (.NET 4.0, ASP.NET, MVC, Ajax, WCF,SQL)

£55000 - £65000 per annum + Benefits + Bonus: Harrington Starr: C# Full Stack ...

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law