Rumours swirl around possible Berlusconi resignation

“Berlusconi will resign between tonight and tomorrow,” tweeted Franco Bechis, deputy director of daily newspaper Libero.

Berlusconi himself denied the rumours. “The voices talking of my resignation are unfounded,” he wrote on his personal Facebook page.

"I spoke to the prime minister a short time ago and he told me the rumors of his resignation were baseless," Fabrizio Cicchitto, head of the parliamentary group of Berlusconi's People of Freedom party said in a statement.

Markets were quick to respond to the rumour with stock markets initially rallying and the yield on Italian bonds falling. But soon after the denial by Berlusconi, stock markets slumped again and government borrowing costs went up.

Even if the resignation rumours turn out to be unfounded, Berlusconi does not appear to be out of trouble yet.

The Italian lower house is set to vote the government’s 2010 budget on Tuesday (8 November). This would normally be a routine piece of legislation but is now seen by many as a vote of confidence in the embattled Italian prime minister.

If Berlusconi loses the vote, president Giorgio Napolitano may ask him to step down.

“Judging from the latest news, it seems that we no longer have the majority and it would be useless to resist,” said Roberto Maroni on Sunday, the country’s interior minister and a heavyweight within the government’s junior coalition partner, the far-right Northern League.

Earlier in the day, Gabriella Carlucci, an MP of Berlusconi’s Freedom of People party and former TV starlet, had announced that she had defected to the opposition. “The only solution for the crisis is a government of national unity,” she said.

Six other government MPs had already said they would vote against the government and asked Berlusconi to “act like a statesman and make way for a new phase in politics and a new government”.

At a rally on Saturday in Rome organised by the Democratic Party, the biggest opposition party, tens of thousands of protesters called for Berlusconi to step down and to allow a government of national unity to restore the country’s dignity. “It was the biggest protest in recent political history,” said Pier Luigi Bersani, the party’s leader.

Berlusconi, meanwhile, seems as confident as ever. “We have verified the numbers and we still have a majority,” he said on Sunday.

Both government parties have repeatedly said they would not support a new government of national unity. “It would be better to go to the ballots,” said Umberto Bossi, leader of the Northern League.

The European Commission, for its part, refused to comment on the situation. But commission spokespeople were at pains to stress that it was different to troubled Greece where the prime minister resigned Sunday amid ongoing recriminations over the latest austerity drive.

European officials are preparing to travel to Rome this week for a detailed assessment of Italy's planned reforms.