New PM faces hard battle to rescue economy

Former European Commissioner Mario Monti (second right) is greeted by senators as he arrives for the vote (Reuters)

Mario Monti was appointed the new Prime Minister of Italy last night, succeeding Silvio Berlusconi and beginning the unenviable task of hauling Italy – and the euro – back from the brink.

Confirmation of the unelected Mr Monti's appointment came hours before financial markets opened this morning. In his first address as Italy's premier, he said that the country needed to work together to give its children a "concrete future".

Mr Berlusconi resigned on Saturday evening after Italy's lower house of parliament voted through a package of deep spending cuts and economic reforms. After his resignation, he slipped out through a side door to avoid hundreds of hecklers.

His departure paved the way for President Giorgio Napolitano to install a technocratic government led by Mr Monti, a 68-year-old former EU Competition Commissioner, which must not only implement cuts and labour reforms but must consider extending them to curb market pressure on Italy's $1.9trn (£1.18trn) of debts.

Initial resistance to an unelected technocrat running the country had subsided yesterday, with more MPs in Mr Berlusconi's People of Freedom (PDL) party coming round to the idea of a stop-gap Monti premiership.

Mr Monti, who gained a reputation for toughness at the EU, was asked yesterday whether he was excited at the prospect of being Italy's next premier. He responded obliquely: "Have you noticed what a beautiful day it is?"

Opposition MPs said the end of Mr Berlusconi's controversial 17-year political career marked a "new dawn".

The Adnkronos news agency reported that Mr Berlusconi had offered Mr Monti the support of all his PDL MPs, in exchange for guarantees on justice legislation – the implication being that Mr Berlusconi was hoping for pledges on criminal law to help him escape convictions in his ongoing trials. Mr Monti refused the offer, the report said.

The new leader was appointed despite the opposition of the PDL's former coalition ally, the right-wing Northern League. Umberto Bossi, a long-time ally of Mr Berlusconi, said his party would not yet back any Monti-led government.

Incredibly, there was even a suggestion yesterday that Mr Berlusconi may try to resurrect his political career. In a message to a minor right-wing party, he said: "I hope to resume with you the path of government."