Berlusconi's threat to government

Silvio Berlusconi's PDL (People of Freedom) party abstained on a confidence vote (Reuters)

Silvio Berlusconi’s PDL party has signaled it was ready to pull the rug out from under the technocrat government of Mario Monti.

Within hours of the PDL (People of Freedom) party abstaining on a confidence vote, Italian borrowing costs rose sharply and share prices fell.

PDL leaders in both houses of parliament announced the centre-right group would not support the government on a key finance bill. PDL Senate leader Maurizio Gasparri added that his colleagues would from now on assume a “position of abstention”.

It was still unclear yesterday evening whether the developments were part of a tit-for-tat spat between the Government and Silvio Berlusconi or an indication that the administration had lost its majority.

On Tuesday evening three-time premier Mr Berlusconi, 76, slated the Monti government. “We can’t go on like this,” the media mogul said, in a statement announcing that he was considering running again in the next general election.

Economic Development Minister Corrado Passera yesterday retorted that news of a return by Mr Berlusconi was “not good for Italy”.

Opposition leader Pier Luigi Bersani of the Democratic Party said yesterday that if Mr Monti had lost his parliamentary majority, then an election would have to be called ahead of the expected date in March.

Political pundit Professor James Walston of the American University in Rome said many PDL parliamentarians were keen to pull the rug out from under the Monti government now because the centre-right's situation was likely to get worse in the coming months.