• Berlusconi (l) says he wants new elections (Photo: The Council of the European Union)

Berlusconi pledges to resign as EU inspectors land in Rome

09.11.11 @ 09:25

  1. By Philip Ebels

BRUSSELS - Following a humiliating rout in parliament on Tuesday (8 November), Italian Prime Minister Silvio Berlusconi has said he will resign immediately after a package of austerity measures is approved - a development expected in the coming weeks.

"We're in a difficult situation with regard to the financial markets. Europe has requested we implement [austerity] measures, and it has done so with great insistence. Parliament has shown that we no longer have a majority. I have therefore asked the head of state, [President Giorgio Napolitano], to convince the opposition to vote in favour of the measures, after which I will hand in my resignation,” Berlusconi said on Tuesday evening on one of his TV channels.

It is up to the president to now begin a round of consultations and to decide on the way forward. Possible scenarios include the formation of an emergency government of national unity that would enjoy a large majority in parliament, a new centre-right coalition or snap elections.

The opposition has in the past pleaded for a government of national unity headed by a figure of standing. One name circulating in Rome is that of former European commissioner Mario Monti.

Berlusconi has said he wants elections. "This parliament today is paralysed," he said.

Markets have welcomed his pledge to soon go.

Italian bond rates earlier this week had hit a record of 6.7 percent, nearing the 7 percent threshold which triggered EU-led bail-outs in Greece, Ireland and Portugal.

The euro strengthened against the dollar and Wall Street closed in the black after the Italian leader spoke out, however. Asian markets early on Wednesday also rose more than one percent.

Italy, the eurozone's third biggest economy, has struggled to convince investors it can repay its €1.9 trillion debt.

European leaders last month demanded that Berlusconi give them a detailed set of new austerity measures, with implementation to be monitored by the European Commission – a first for a country that is not formally signed up to a bail-out programme.

The first batch of commission officials arrived in Rome on Tuesday to make "a detailed assessment." EU economic affairs commissioner Olli Rehn the same day noted that the situation in Italy is "very worrying."

For his part, the Italian ambassador to the European Union, Ferdinando Nelli Feroci, downplayed the nature of the mission, describing it in remarks to the Dow Jones newswire as a "dialogue, not an inspection."