Italian President Giorgio Napolitano will today begin the crucial political process of deciding how to establish a new government in order to cement a stable political and economical future for his country.
This move follows last night’s announcement by Prime Minister Silvio Berlusconi that he is to resign, despite his claims a day earlier that he would remain in office.
The transition will take a number of weeks, as both houses of parliament must first pass key reforms demanded by the European Union to cut the country’s debt and boost economic growth.
As of yet, it is unclear if a new coalition government will take power or if there will be a general election. Many critics have argued that the last thing the country needs at present is an election as it will lead to huge cost and may also destabilise the leadership of the country at a time when they need it most.
Italian stocks opened 1.38% higher this morning following Berlusconi’s announcement, while the Euro was steady against the dollar in Asian markets with The Hang Seng in Hong Kong and the Nikkei in Tokyo both increasing by 1%.
President Napolitano is faced with a tense few weeks as he attempts to steer Italy through a political crisis at a time when the country’s financial independence is under threat from France and Germany.
The financial markets would hope that the controversial Berlusconi could be replaced by a technocratic coalition, which would introduce overdue but deeply unpopular economic reform, such as in the area of pensions.
Berlusconi said today he sees Italy holding early elections at the start of February and that he will not be a candidate for office again.
“I will resign as soon as the (budget) law is passed, and, since I believe there is no other majority possible, I see elections being held at the beginning of February and I will not be a candidate in them,” he was quoted as saying in a conversation with the editor of La Stampa newspaper.
As the negotiations get under way, a series of economic reforms demanded by the EU should go through both houses of parliament, possibly as early as 15 November.
