Outbreak of political sanity calms markets

Italy and Greece

Milan

The austerity package designed to pull Italy – and the euro – back from the brink was on schedule for approval by lunchtime today after a distinctly un-Italian display of cross-party unity saw it race through the Senate yesterday.

Investors saw the bill's swift passage as evidence the gravity of Italy's situation had finally dawned on parliament; by the afternoon borrowing costs had eased and Milan's stock market had rallied. After a torrid week in the eurozone, there was also, finally, a new government in place in Greece as the former European Central Bank board member Lucas Papademos was sworn in as the country's Prime Minister and a new government was appointed after five days of political wrangling.

The unelected Prime Minister and his new government – which includes the former Finance Minister Evangelos Venizelos – have been tasked with introducing the latest austerity measures imposed by the international community in return for the next tranche of vital bailout cash.

Italy is hoping that its actions this week will stave off the need for assistance. If as expected the Italian lower house rubber-stamps the "stability package" this evening, today should also see the departure of Silvio Berlusconi from the Prime Minister's office.

The package of cuts and reforms is designed to save €60bn and erase Italy's budget deficit by the end of 2013. Measures include boosting flexibility in labour markets, a freeze in public sector pay, raising the retirement age and a new crackdown on tax evasion. Few believe passing the law will be enough, however, if there isn't a determined government quickly in place to enforce it after Mr Berlusconi's departure – hence the urgency with which President Giorgio Napolitano is seeking to install the respected economist Mario Monti as caretaker premier. His mandate will be to build a consensus government of moderate politicians and technocrats as the next phase in the plan to rescue Italy's economy.

Mr Monti was greeted by applause as he entered the Senate yesterday as its newest life member, as part of President Napolitano's plans to beef up the former EU Competition Commissioner's political credentials. But, with a number of MPs calling for fresh elections rather than a Monti-led administration, other politicians and business leaders repeated demands for parliament to put financial stability ahead of politics.

Gianni Alemanno, the conservative Mayor of Rome, came out in favour of a Monti administration. "There has to be a technical government," he said. Emma Marcegaglia, the head of the employers' confederation Confindustria, said opting for elections could prove disastrous. "There are no alternatives [to an emergency government] because a three-month election campaign would ruin the country," Ms Marcegaglia said.

Divisions running through Mr Berlusconi's ruling People of Freedom (PDL) party over a technocrat administration were vividly demonstrated when the moderate Foreign Minster, Franco Frattini, got into a public spat with the fiery Defence Minister and ex-fascist party member Ignazio La Russa, who wants fresh elections. Mr Frattini had dismissed the "fascists of the PDL" who were "trying to ruin everything again".

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
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

Ashdown Group: Marketing & Sales Manager

£40000 per annum: Ashdown Group: A reputable organisation within the leisure i...

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Recruitment Genius: Doctors - Dubai - High "Tax Free" Earnings

£96000 - £200000 per annum: Recruitment Genius: Looking for a better earning p...

Recruitment Genius: PHP Developer

£32000 - £36000 per annum: Recruitment Genius: A rapidly expanding company in ...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste