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Mario Monti

Thousands of protesters, led by trade unionists, have rallied in Rome against the policies of Italy’s new coalition government.

Wielding red flags and placards, they urged the centre-left prime minister, Enrico Letta, to scrap austerity measures and focus on job creation.

Public trust in his fragile coalition with the centre-right is dropping, opinion polls suggest.

Italy is experiencing its longest recession in more than 40 years.

National debt is now about 127% of annual economic output, second only to Greece in the eurozone.

Unemployment is at a record high of 11.5% – 38% for the under-25s.

Before taking office, Enrico Letta vowed to make job creation his priority, but critics are unhappy that he has focused on property tax reform.

The issues of social justice and poverty came up when German Chancellor Angela Merkel had talks with the new Pope, Francis, at the Vatican on Saturday.

Organized by the metalworkers’ union FIOM and the CGIL union, Saturday’s peaceful march and rally drew supporters from across Italy. The turnout was unclear but 50,000 people had been expected to attend.

“We ask the government to change [former Prime Minister Mario] Monti’s and [former Prime Minister Mario Silvio] Berlusconi’s politics,” said Maurizio Landini, leader of the FIOM.

“If they don’t change, as the country asked for with its vote, we are going nowhere.”

A controversial poster depicted Chancellor Angela Merkel, who is seen as typifying austerity

A controversial poster depicted Chancellor Angela Merkel, who is seen as typifying austerity

One of the protesters, Enzo Bernardis, told Reuters news agency: “We hope that this government will finally start listening to us because we are losing our patience.”

Soon after being appointed, Enrico Letta met other eurozone leaders to convey growing public unrest over austerity measures in Italy.

But the new prime minister has to maintain a delicate balance between the policies of his own supporters and those of the centre-right, led by Silvio Berlusconi.

Italy’s coalition was only formed after two months of post-election deadlock.

Among the demonstrators in Rome were radical leftists.

A controversial poster depicted Chancellor Angela Merkel, who is seen as typifying austerity, in mock-Nazi uniform.

On Thursday, Pope Francis said in a speech that the global economic crisis had made life worse for millions in rich and poor countries.

Speaking after her private meeting with the pontiff, Angela Merkel told reporters: “Crises have blown up because the rules of the social market have not been observed…

“It is true that economies are there to serve people and that has by no means always been the case in recent years.”

Angela Merkel said she and Pope Francis had spoken mainly about globalization, the European Union and the role of Europe in the world.

“Pope Francis made it clear that we need a strong, fair Europe and I found the message very encouraging,” she added.

While she is not a Catholic herself, Angela Merkel, the daughter of a Lutheran minister, leads a party with a strong Catholic component.

President Giorgio Napolitano has asked a select group of people to offer a policy platform to end the impasse in forming a new government in Italy.

Giorgio Napolitano named 10 “wise men” to work in two separate groups.

The president’s announcement ended speculation that he might resign – a day after political parties failed to agree a coalition government following February’s inconclusive election.

Giorgio Napolitano said he would serve out his mandate that ends on May 15.

Giorgio Napolitano named 10 "wise men" to work in two separate groups to end the impasse in forming a new government in Italy

Giorgio Napolitano named 10 “wise men” to work in two separate groups to end the impasse in forming a new government in Italy

Italy has been governed by a group of technocrats led by Mario Monti since late 2011 – when centre-right leader Silvio Berlusconi resigned in the middle of an acute economic crisis.

Giorgio Napolitano said that Mario Monti’s caretaker cabinet was still “operational” and “in charge”.

However, the continuing political stalemate is delaying reforms that could help revive Italy’s recession-hit, debt-laden economy.

Giorgio Napolitano finished consultations with Italy’s main political leaders on Friday.

In the absence of agreement, he said he asked “two small groups of personalities” to formulate “precise programme proposals” that could be supported by political parties – and serve as a basis for a new cabinet.

The first group will be asked to work on pressing political and institutional issues, while the second will focus on economic and social problems.

Among the 10 “wise men” are Enrico Giovannini, head of Italy’s Istat statistics agency, European Affairs Minister Enzo Moavero Milanesi, Bank of Italy deputy director Salvatore Rossi and Valerio Onida, a former judge on the country’s constitutional court.

“I want to underline one more time the need for all political parties to demonstrate their full awareness of the gravity and urgency of the problems facing the country,” Giorgio Napolitano said.

Italy’s parliament is currently split in three main blocs – each without enough seats to govern alone.

Pier Luigi Bersani’s centre-left coalition won the most votes in the February election, but failed to secure a majority in both houses of parliament.

The bloc has ruled out an alliance with Silvio Berlusconi’s centre-right alliance, which finished a close second.

The protest group Five Stars Movement led by former comedian Beppe Grillo garnered a quarter of the vote, but has refused to support either group.

Italy’s 10 “Wise Men”:

  • Political and institutional reform group
  1. Prof. Valerio Onida – University of Milan constitutional law expert
  2. Luciano Volante – former parliament speaker from Pier Luigi Bersani’s party
  3. Mario Mauro – senator in Mario Monti’s party
  4. Gaetano Quagliariello – senator in Silvio Berlusconi’s party
  • Economic and social reform group
  1. Prof. Enrico Giovannini – statistics agency head
  2. Giovanni Pitruzzella – Competition Authority head
  3. Salvatore Rossi – Bank of Italy deputy head
  4. Enzo Moavero Milanesi – European Affairs minister

5-6. Giancarlo Giorgetti and Filippo Bubbico – parliament commission heads

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Italy’s President Giorgio Napolitano has said he will ask a select group of people to offer a policy platform to try to end the impasse in forming a new government.

Giorgio Napolitano said the names would be released later on Saturday.

The president’s announcement ended speculation that he might resign – a day after political parties failed to agree a coalition government following February’s inconclusive election.

Giorgio Napolitano said he would serve out his mandate that ends on May 15.

Italy’s President Giorgio Napolitano has said he will ask a select group of people to offer a policy platform to try to end the impasse in forming a new government

Italy’s President Giorgio Napolitano has said he will ask a select group of people to offer a policy platform to try to end the impasse in forming a new government

Italy has been governed by a group of technocrats led by Mario Monti since late 2011 – when centre-right leader Silvio Berlusconi resigned in the middle of an acute economic crisis.

President Napolitano said that Mario Monti’s caretaker cabinet was still “operational” and “in charge”.

However, the continuing political stalemate is delaying reforms that could help revive Italy’s recession-hit, debt-laden economy.

Giorgio Napolitano finished consultations with Italy’s main political leaders on Friday.

In the absence of agreement, Italian analysts had said Giorgio Napolitano was contemplating quitting to enable a successor to try to form a new cabinet or dissolve parliament and call new elections.

However, Giorgio Napolitano said he planned to stay on “to the end”.

He was, instead, going to ask “two small groups of personalities” to formulate “precise programme proposals” that could be supported by political parties – and serve as a basis for a new cabinet.

“I want to underline one more time the need for all political parties to demonstrate their full awareness of the gravity and urgency of the problems facing the country,” Giorgio Napolitano said.

There has been talk of the possibility of the president ultimately seeking to form a temporary, technocrat-style administration.

Italy’s parliament is currently split in three main blocs – each without enough seats to govern alone.

Pier Luigi Bersani’s centre-left coalition won the most votes in the February election, but failed to secure a majority in both houses of parliament.

The bloc has ruled out an alliance with Silvio Berlusconi’s centre-right alliance, which finished a close second.

The protest group Five Stars Movement led by former comedian Beppe Grillo garnered a quarter of the vote, but has refused to support either group.

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Former prime minister and centre-right leader Silvio Berlusconi says he is against the idea of a new technocratic government for Italy like that led by Mario Monti.

Instead, Silvio Berlusconi said he was ready to back a coalition with centre-left leader Pier Luigi Bersani, to end the deadlock since the February election.

However, Pier Luigi Bersani, whose bloc won a narrow lead in the polls, has ruled out a coalition with the right.

If no government is formed, new elections may be called.

Silvio Berlusconi says he is against the idea of a new technocratic government for Italy like that led by Mario Monti

Silvio Berlusconi says he is against the idea of a new technocratic government for Italy like that led by Mario Monti

The stalemate is delaying reforms which could help revive Italy’s recession-hit, debt-laden economy, which is the third-biggest in the eurozone.

Italy’s political establishment was rocked by the electoral success of a protest movement, Five Star, which won a quarter of the vote on a platform attacking the parties of both right and left.

Mario Monti’s technocratic government, formed in November 2011, remains in office until a new elected government is formed. He has said he “can’t wait” to leave office.

Speaking after talks with President Giorgio Napolitano, Silvio Berlusconi said he believed there was scope for agreement on action to address the economic crisis.

Silvio Berlusconi said he would back a coalition made up of the left, right and centre.

Any new government must be made up of political parties, “given the tragic experience” of the Monti government, the People of Freedom party leader said.

Silvio Berlusconi’s ally Roberto Maroni, leader of the right-wing Northern League, also rejected another technocratic government, saying it would be better to hold another election.

Recent opinion polls suggest Silvio Berlusconi and Roberto Maroni have, between them, a narrow lead over the centre-left.

Pier Luigi Bersani has already tried and failed to form a new government, whether as a coalition or as a minority government.

“Only a mentally ill person could have a burning desire to govern right now,” he said on Wednesday at a meeting with Five Star politicians.

Five Star, led by former comedian Beppe Grillo, has made clear it will not back any government led by either the centre-left or centre-right.

Beppe Grillo posted an entry on his blog this week in which he called mainstream politicians including Silvio Berlusconi and Pier Luigi Bersani “old whoremongers”.

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European markets and politicians have reacted anxiously after Italy’s general election produced a stalemate between centre-right and centre-left blocs.

France and Germany urged continued reform, while Spain described the result as a “jump to nowhere”.

Italian markets fell sharply while others in Europe and around the world opened down.

Centre-right leader Silvio Berlusconi said fresh elections should be avoided, and called for a period of reflection.

With all domestic votes counted, Pier Luigi Bersani’s centre-left bloc won the lower house vote but has failed to secure a majority in the Senate. Control of both houses is needed to govern.

A protest movement led by comedian Beppe Grillo won 25%, but the centrist bloc led by current PM Mario Monti came a poor fourth, with about 10%.

The outcome of the election, which comes amid a deep recession and tough austerity measures, was so close between the two main blocs that the margin of victory given in interior ministry figures was less than 1% in both houses of parliament.

The winning bloc automatically gets a majority in the lower house. But the same is not true in the Senate, where seat allocations are decided by region and can conflict with the national vote.

European politicians reacted with a mixture of calm and concern.

European Commission spokesman Olivier Bailly said the EU expected Italy to “honor its commitments” on debt and deficit reduction, and other structural reform.

“We clearly hear the message of concern expressed by Italian citizens,” he said at a news conference.

“The Commission has full confidence in Italian democracy and… will work closely with the future government towards the re-launch of growth and job creation in Italy.”

French Finance Minister Pierre Moscovici said the result “creates problems” but would not undermine the European single currency.

German Foreign Minister Guido Westerwelle, meanwhile, urged Italy to continue its reforms, and called for a government to be formed “as quickly as possible”.

But his Spanish counterpart there was “extreme concern” about the financial consequences.

“This is a jump to nowhere with positive consequences for nobody,” Jose Manuel Garcia-Margallo said, according to Associated Press news agency.

European markets and politicians have reacted anxiously after Italy's general election produced a stalemate between centre-right and centre-left blocs

European markets and politicians have reacted anxiously after Italy’s general election produced a stalemate between centre-right and centre-left blocs

Shares and the euro fell as the outcome of the election became clear, amid concern that the reform agenda would be delayed.

Italy’s FTSE MIB index initially fell 4.7%, while London’s FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2%.

In New York, the Dow Jones Industrial Average fell 1.55% and Asian markets lost between 0.7% and 2.2%.

The yield on Italian government bonds rose sharply, implying markets are more wary of lending to Italy.

As Silvio Berlusconi conceded to his opponents in the lower house, he said that everyone should now reflect on what to do next so that fresh elections could be avoided.

“Italy must be governed,” Silvio Berlusconi said.

“Everyone must be prepared to make sacrifices.”

He would not do a deal with Mario Monti’s centrist bloc, saying that the prime minister’s poor showing was down to popular discontent with his austerity measures.

Silvio Berlusconi, 76, left office in November 2011, facing claims of economic mismanagement as the eurozone struggled to contain Italy’s debt crisis.

Italians have had more than a year of technocratic government under Mario Monti. But his attempts to reduce spending caused widespread public resentment and his decision to head a centrist list in the parliamentary elections attracted little more than 10% of the vote.

In a surge in support, Beppe Grillo’s anti-austerity Five Star Movement attracted more than a quarter of the vote, making it the most popular single party in the lower chamber.

Correspondents say this was an extraordinary success for the Genoese comic, whose tours around the country throughout the election campaign – hurling insults against a discredited political class – resulted in his party performing well in both chambers.

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Italy’s parliamentary elections have ended in stalemate and the possibility of a hung parliament.

With all domestic votes counted, Pier Luigi Bersani’s centre-left bloc has narrowly beaten ex-PM Silvio Berlusconi in the lower house but has failed to secure a majority in the Senate.

Control of both houses is needed to govern and a Berlusconi official said the election was “too close to call”.

A protest movement led by comedian Beppe Grillo won a quarter of the vote.

Meanwhile a bloc led by current Prime Minister Mario Monti came a poor fourth, with about 10%.

The outcome of the election, which comes amid a deep recession and tough austerity measures, was so close that the margin of victory given in interior ministry figures was less than 1% in both houses of parliament.

“It is clear to everyone that a very delicate situation is emerging for the country,” said centre-left leader Pier Luigi Bersani as the last of the votes were being counted.

Angelino Alfano, secretary of former PM Silvio Berlusconi’s People of Freedom party, said the result was “extraordinary”, and he urged the interior ministry to wait before declaring a final result.

The interior ministry figures were not official, he argued, and were “inevitably subject to a margin of error”.

With returns from all polling stations processed, the interior ministry figures gave Pier Luigi Bersani’s centre-left bloc 29.54% of the vote for the lower house (Chamber of Deputies), barely ahead of the 29.18% polled by Silvio Berlusconi’s bloc.

Angelino Alfano said the result was “too close to call” given the tight margin between the two blocs.

Votes cast outside Italy are still to be collected.

Pier Luigi Bersani also won the national vote for the Senate, but was unable to secure the 158 seats required for a majority.

As bonus seats are distributed in the upper house according to regional votes, Silvio Berlusconi’s centre-right bloc was expected to emerge with a higher number of seats.

Italy's parliamentary elections have ended in stalemate and the possibility of a hung parliament

Italy’s parliamentary elections have ended in stalemate and the possibility of a hung parliament

Silvio Berlusconi was heading for victory in three of the four big regions – Lombardy in the north, Campania in the centre, and Sicily in the south.

Initial exit polls on Monday afternoon gave Pier Luigi Bersani’s bloc a clear victory, prompting the Milan stock market to soar by nearly 4%.

But as the close result became clear the markets fell back. In New York, the Dow Jones Industrial Average fell 1.55% and Asian markets lost between 0.7% and 2.2%.

The apparent split between left and right in the eurozone’s third largest economy is likely to cause great anxiety among leaders in other EU member states.

A period of horse-trading will now follow, and the leading blocs will try in turn to form a coalition.

But, with the electorate apparently so divided, many believe a second election will have to follow in a few months.

Silvio Berlusconi, 76, left office in November 2011, facing claims of economic mismanagement as the eurozone struggled to contain Italy’s debt crisis.

Italians have had more than a year of technocratic government under Mario Monti. But his attempts to reduce spending caused widespread public resentment and his decision to head a centrist list in the parliamentary elections attracted little more than 10% of the vote.

“Some supposed we’d get a slightly better result but I am very satisfied, we are very satisfied,” he said.

In a surge in support, Beppe Grillo’s anti-austerity Five Star Movement attracted 25.54% of the vote.

Correspondents say this was an extraordinary success for the Genoese comic, whose tours around the country throughout the election campaign – hurling insults against a discredited political class – resulted in his party performing well in both chambers.

“We’ve started a war of generations,” Beppe Grillo said in an audio statement on his website which taunted the leaders of the mainstream parties.

“They are all losers, they’ve been there for 25 to 30 years and they’ve led this country to catastrophe.”

As the extent of his success became clear on Monday night, Beppe Grillo’s supporters in his home town of Genoa celebrated early into Tuesday morning.

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Early exit polls from Italy’s general election show a lead for the centre-left bloc led by Pier Luigi Bersani.

The polls suggest Pier Luigi Bersani’s alliance has taken around 34% of the vote for parliament’s lower house, ahead of Silvio Berlusconi’s centre-right group with 29%, Sky Italia reports.

Beppe Grillo’s protest movement is projected to take nearly 20% of votes.

The two-day vote is seen as crucial for efforts to tackle Italy’s economic problems, as well as for the eurozone.

The election was called two months ahead of schedule, after Silvio Berlusconi’s party withdrew its support for Mario Monti’s technocratic government.

The first results based on partial vote counts are due in the next few hours.

If the exit polls are confirmed, they would echo the opinion polls prior to the election which made Pier Luigi Bersani’s centre-left Democratic Party (PD) a consistent frontrunner at nearly 35%.

Pier Luigi Bersani, a former Communist, has pledged to continue with the tough reforms of Mario Monti’s technocratic government, but suggests current European policy needs to do more to promote growth and jobs.

Silvio Berlusconi’s People of Freedom (PdL) centre-right alliance had narrowed the PD lead in the final weeks of campaigning – and may yet prevent Pier Luigi Bersani from winning an overall majority in the Senate, which is being fought on a region-by-region basis.

The fiercely anti-establishment Five Star movement of former comedian Beppe Grillo drew wide and growing support during the campaign, and threatened to be the major upset for the election.

Early exit polls from Italy's general election show a lead for the centre-left bloc led by Pier Luigi Bersani

Early exit polls from Italy’s general election show a lead for the centre-left bloc led by Pier Luigi Bersani

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Italy has begun voting in general elections seen as crucial for the country’s effort to tackle its economic problems, as well as for the eurozone.

Estimates published before a ban on polls two weeks ago gave a lead to Pier Luigi Bersani’s centre-left alliance.

It was thought to be a few points ahead of the centre-right bloc led by ex-Prime Minister Silvio Berlusconi.

On Saturday, Silvio Berlusconi gave a TV interview – in what his opponents said was a breach of the campaigning ban.

However, Silvio Berlusconi’s office later said the interview had been granted only with the explicit agreement that it would be broadcast after polls close on Monday.

A centrist coalition led by outgoing Prime Minister Mario Monti is also running in the election, held on Sunday and Monday.

And opinion polls suggested there would be a strong turnout for popular comedian Beppe Grillo’s anti-establishment movement.

The election was called two months ahead of schedule, after Silvio Berlusconi’s party withdrew its support for Mario Monti’s technocratic government.

The voting is taking place amid a deep recession and austerity measures that have caused widespread public resentment.

It is also being closely watched in the eurozone, with the Italian government’s future commitment to austerity measures particularly under scrutiny.

Italy has begun voting in general elections seen as crucial for the country's effort to tackle its economic problems, as well as for the eurozone

Italy has begun voting in general elections seen as crucial for the country’s effort to tackle its economic problems, as well as for the eurozone

On the first voting day on Sunday, polls across Italy opened 08:00 and will close at 22:00.

The voting will resume again on Monday at 08:00 and finish at 15:00. First results are expected in the early evening.

Some 47 million eligible voters are electing both chambers of parliament – the The Chamber of Deputies and the Senate.

The electoral system is based on proportional representation and party lists, with a series of thresholds to encourage parties to form coalitions.

Pier Luigi Bersani’s centre-left Democratic Party (PD) has been a consistent frontrunner in the opinion polls at nearly 35%.

Pier Luigi Bersani, a former Communist, has pledged to continue with Mario Monti’s reforms, but suggests current European policy needs to do more to promote growth and jobs.

However, recent weeks have seen a narrowing of his lead over Silvio Berlusconi’s People of Freedom (PdL) alliance, who is critical of austerity measures.

Beppe Grillo’s Five Star Movement (M5S) was running third in the polls.

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Former PM Silvio Berlusconi is trying to buy votes in Italy’s election on Sunday by sending out letters promising a tax rebate, his rivals have alleged.

Centre-left leader Pier Luigi Bersani labelled it a “scam”, while the leader of a smaller party accused Silvio Berlusconi of committing a crime.

The letter was sent to voters in swing regions of Italy.

It vows to scrap the unpopular property tax brought in under ex-Prime Minister Mario Monti and pay voters back.

Silvio Berlusconi had already made the pledge on the campaign trail, but putting it in a letter to voters outraged his opponents.

“If I’d crossed paths with Berlusconi after the letter was sent, I’d have told him he’s a cheat,” said Pier Luigi Bersani, whose long-time lead in the polls has been gradually cut back by Silvio Berlusconi.

Former anti-mafia prosecutor Antonio Ingroia, who leads new left-wing Civic Revolution party, said on his website: “With the letter sent to Italians promising money in exchange for votes, Berlusconi has committed one crime, possibly two.”

He called for Silvio Berlusconi to be prosecuted.

Silvio Berlusconi is trying to buy votes in Italy's election on Sunday by sending out letters promising a tax rebate,

Silvio Berlusconi is trying to buy votes in Italy’s election on Sunday by sending out letters promising a tax rebate,

The letter came in an official-looking envelope, headed: “Important notice: reimbursement of IMU 2012.”

“The refund will be available either through a transfer into your bank account, or to you personally at the counter of the post office,” the letter said, according to Reuters.

It was sent to millions of households in Sicily, Veneto, Campania and Lombardy – key regions which could decide the result of the election, which is held on Sunday and Monday.

The IMU tax amounts to 0.4% of the value of a property owner’s primary residence, and is comparable to similar taxes levied elsewhere in Europe.

Polls have shown it is the most unpopular of the budget measures brought in by the Monti government to try to restore confidence in Italy’s finances.

Market confidence in Italy collapsed during 2011 because of its very high debt burden, and only began to recover after Mr Berlusconi resigned as prime minister and Mr Monti took over.

Silvio Berlusconi has declared: “The house is sacred. It should not be taxed.”

But Mario Monti, who is also heading an election coalition, retorted: “When I said that Berlusconi would try to buy the votes of the Italian people with the money of the state, I didn’t think he would [do it] to the letter.”

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Outgoing Prime Minister Mario Monti is to lead a coalition of centre parties going into Italy’s parliamentary election in February.

Speaking to reporters after four hours of talks with centrist politicians, he said he was willing to be “named leader of the coalition”.

Mario Monti resigned after 13 months as prime minister when predecessor Silvio Berlusconi withdrew his support.

The Vatican newspaper backs Mario Monti’s bid to return as prime minister.

Mario Monti clearly threw his hat into the political ring at a news conference on Friday evening.

“A new political formation has been born,” Mario Monti said.

A single reform list, grouping together centrist parties, would stand for election to the Senate under the provisional title “Monti’s agenda for Italy”, he said.

But in the lower house, the chamber of deputies, there would be a coalition of centrist parties, including the Christian Democrat UDC.

As senator for life, Mario Monti cannot stand for election, but he is able to take part in the campaign and could return to the post of prime minister if a centrist coalition were successful.

He was brought in to form a technocratic government last year after the government of Silvio Berlusconi collapsed under pressure from the financial markets.

Outgoing Prime Minister Mario Monti is to lead a coalition of centre parties going into Italy's parliamentary election in February

Outgoing Prime Minister Mario Monti is to lead a coalition of centre parties going into Italy’s parliamentary election in February

Mario Monti, a former economics professor and European Union Commissioner, was chosen to impose financial rigor on the economy.

In power, he made some progress early on, including raising the retirement age and structural reforms.

But later policies were watered down and Silvio Berlusconi and his centre-right People of Freedom (PDL) party increasingly attacked Mario Monti’s economic austerity.

Mario Monti has described his 13 months in office as “difficult but fascinating”.

“The work we did… has made the country more trustworthy… more competitive and attractive to foreign investors,” he said.

However, ordinary Italians have been hard hit by the combination of tax rises and spending cuts Mario Monti has imposed to repair Italy’s public finances and it is uncertain how well he will fare in the election on 24-25 February 2013.

The left-wing Democratic Party is currently leading the opinion polls, while Silvio Berlusconi will lead the challenge from the right as head of his PDL party.

Mario Monti was optimistic that the electorate will stick with him. He told an impromptu news conference that he expected his supporters could win a “significant result” in the election.

Italian parliament has been dissolved by President Giorgio Napolitano following caretaker Prime Minister Mario Monti’s resignation.

The move paves the way for elections, now confirmed for 24-25 February.

Mario Monti, brought in last year to form a technocratic government, stepped down on Friday after MPs passed his budget.

It followed the withdrawal of support from former PM Silvio Berlusconi’s party. Silvio Berlusconi is to run again. Mario Monti has not unveiled his plans.

After meeting political leaders, President Giorgio Napolitano told reporters: “I have just signed the decree for the dissolution of parliament.”

He called for a “measured and constructive electoral campaign”.

Soon after, the cabinet announced that the election would be held over two days, on 24-25 February.

Mario Monti, who remains head of an interim administration until the elections, is expected to announce on Sunday whether he will run again.

Italian parliament has been dissolved by President Giorgio Napolitano following Prime Minister Mario Monti's resignation

Italian parliament has been dissolved by President Giorgio Napolitano following Prime Minister Mario Monti’s resignation

Although the economist and former European commissioner cannot stand for election himself as he is already a senator for life, there is speculation that he could become the unofficial leader of a centrist coalition and return as a minister.

Since taking office in November 2011, Mario Monti and his non-party team of ministers have implemented economic austerity measures in the form of spending cuts and tax hikes.

In his last speech before his resignation, Mario Monti said the last 13 months had been “difficult but fascinating”.

“The work we did… has made the country more trustworthy… more competitive and attractive to foreign investors,” he told foreign diplomats in Rome.

The election was triggered after Silvio Berlusconi’s party withdrew its support from Mario Monti’s government, accusing it of following policies that “were too German-centric”.

The three-times prime minister has said he intends to campaign on an anti-austerity platform, pledging to cut taxes and create jobs.

But the polls show Silvio Berlusconi is trailing a centre-left alliance led by Pier Luigi Bersani, which broadly supports a continuation of Mario Monti’s economic programme while pledging to ease some of the pressure on the poorest members of society.

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Italian Prime Minister Mario Monti has resigned today, keeping a promise to step down after the passing of his budget by parliament.

MPs earlier passed the 2013 budget drawn up by his government with 309 votes in favor and 55 against.

An announcement on whether Mario Monti will take part in elections – expected in February – will probably be made at a news conference on Sunday.

Mario Monti was brought in to form a technocratic government last year.

However, the conservative People of Freedom party of his predecessor, Silvio Berlusconi, withdrew its support for his cabinet this month.

Silvio Berlusconi, a three-time prime minister already, is fighting his sixth election campaign.

The new political uncertainty in Italy, the third-biggest economy in the eurozone, has unsettled investors.

Mario Monti travelled to the presidential palace after a cabinet meeting late on Friday to hand in his resignation to President Giorgio Napolitano.

President Giorgio Napolitano accepted the resignation and called on Mario Monti to remain as head of an interim administration until the elections, which analysts say will most probably be held on February 24.

The date will be determined after President Giorgio Napolitano consults with political leaders on Saturday and dissolves the two chambers.

Italian Prime Minister Mario Monti has resigned today, keeping a promise to step down after the passing of his budget by parliament

Italian Prime Minister Mario Monti has resigned today, keeping a promise to step down after the passing of his budget by parliament

In his last speech before his resignation, Mario Monti said his 13 months in office had been “difficult but fascinating”.

“The work we did… has made the country more trustworthy… more competitive and attractive to foreign investors,” Mario Monti told foreign diplomats in Rome.

Opinion polls suggest the centre-left Democratic Party, under Pierluigi Bersani, will win the largest share of the vote in the election.

Since taking office with his non-party team of ministers, Mario Monti has been implementing economic austerity measures and argues that his spending cuts and tax hikes have staved off disaster.

The economist and former European commissioner cannot stand for election himself as he is already a senator for life but he could theoretically return as a minister, perhaps as unofficial leader of a centrist coalition.

“Those closest to him say he has not yet decided and do not rule out a surprise decision,” the Italian daily Corriere Della Sera said.

“Slowly, as the hours pass, the largest parties which supported Monti begin to see him as a potential adversary.”

On Thursday, Mario Monti, 69, defended the “bitter medicine” of budgetary discipline, in what appeared to be a response to attacks by Silvio Berlusconi on austerity policies.

Mario Monti told workers at the Fiat factory that it would be “irresponsible to waste all the sacrifices that Italians [had] made”.

On Friday, he joked that the impending end of his technocratic government was “not the fault of the Mayan prophecy”, referring to a prediction that the world would end on Friday.

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Italian stocks have fallen sharply, reacting to news that Prime Minister Mario Monti plans to resign and former premier Silvio Berlusconi is to run for office again.

The main Italian stock index fell 3.1%.

Other indexes throughout Europe were also lower, with banks the worst hit among shares.

Mario Monti became the leader of a technocrat government in 2011 after investors became worried about Italy’s economic health.

Silvio Berlusconi’s People of Freedom party withdrew its support from the government on Thursday, and Berlusconi confirmed he would lead his party into next year’s elections – now on course to be held slightly earlier than expected.

Mario Monti had planned to serve until April 2013, when the current parliamentary term runs out. He had hoped this would be enough time to “rescue Italy from financial ruin”.

The withdrawal of his political support means that elections are now set for February.

Mario Monti replaced Silvio Berlusconi after the Italian 10-year bond yield reached a euro-era record of 7.48% in November 2011, bringing about Berlusconi’s departure. Since then, Italy’s yields have dropped and the focus has shifted to Spain, which has taken a bailout for its banks, and back to Greece.

However, on Monday, Italy’s 10-year bond yield jumped more 0.3 percentage points to 4.8%.

Among individual shares in Italy, banks were the hardest hit. Italy’s biggest, Unicredit, fell 6%. Banca Monte dei Paschi di Siena fell 7% and Banca Popolare di Milano declined 6.9%.

Across banks in Europe, Germany’s Commerzbank fell 2.9% and France’s BNP Paribas dropped 2.5%. In Spain, banks such as Santander, Bankia and BBVA all turned lower.

“Monti is the one who managed to stabilise Italy and stop the contagion from Greece,” said David Thebault, a trader at Global Equities.

“His surprise resignation brings back the political risk in the equation, something we had forgotten about.”

Italian stocks have fallen sharply, reacting to news that Prime Minister Mario Monti plans to resign and former premier Silvio Berlusconi is to run for office again

Italian stocks have fallen sharply, reacting to news that Prime Minister Mario Monti plans to resign and former premier Silvio Berlusconi is to run for office again

Italy’s government has the biggest debt burden of any of the major eurozone countries at 123% of economic output (GDP), which makes it particularly susceptible to a loss of market confidence. This is because higher borrowing costs would make it very difficult, if not impossible, for the government to roll over its debts as they come due for payment.

Jane Foley, a currency strategist at Rabobank, said: “The resignation of Italy’s technocrat PM Monti at the weekend has re-awakened fears of a return to old style political theatre in the country and brought some fresh downside pressure for the euro.”

The 17-nation currency fell against the dollar and British pound.

Mario Monti, an economist who heads a unelected cabinet of technocrats, has said he will try to pass a budget and financial stability law before standing down.

A statement from the office of President Giorgio Napolitano over the weekend said that Mario Monti “does not think it possible to continue his mandate and consequently made clear his intention to present his resignation”.

If the law for next year’s budget can be passed “quickly”, Mario Monti would immediately confirm his resignation, the statement said.

An election must come within 70 days of the government resigning. Italy had been due to go to the polls by April at the latest.

Mario Monti – a respected former commissioner at the European Union – has tried to pass reforms, including implementing in July a series of spending cuts of 26 billion euros ($32 billion) over three years to tackle the deficit.

But many of the proposals have been watered down or stalled as they have gone through parliament.

Italy’s economy has been shrinking all year – its fourth recession of the past 10 years.

Employers’ lobby group Confindustria predicts that the economy will shrink 2.4% this year, with unemployment hovering around 11%. The government forecasts the economy will contract by 1.2% this year.

Silvio Berlusconi was convicted of tax fraud in October, though he is appealing against that ruling, and he is also on trial accused of paying for sex with an underage prostitute.

He has already served as Italy’s prime minister for three separate terms and built up what is believed to be a vast personal fortune from his business empire.

Silvio Berlusconi has confirmed he will run for prime minister again in 2013.

Former Italian Prime Minister Silvio Berlusconi told reporters in Milan that he was “running to win” – and that his decision came after his People of Freedom party had not found a leader who was as well known as him.

Silvio Berlusconi, 76, said PM Mario Monti’s austerity policies had harmed Italy.

He resigned in November 2011 over Italy’s economic troubles and was convicted of tax fraud in October.

He is appealing against that ruling.

Silvio Berlusconi is also on trial accused of paying for sex with an under-age prostitute, in the so-called “Ruby” case. He denies wrongdoing.

He has already served as Italy’s prime minister for three separate terms and built up what is believed to be a vast personal fortune from his business empire.

Silvio Berlusconi told reporters in Milan that everyone in his party had agreed that the PDL needed a leader “like Berlusconi in 1994” but “there wasn’t one”.

Silvio Berlusconi has confirmed he will run for prime minister again in 2013

Silvio Berlusconi has confirmed he will run for prime minister again in 2013

“It’s not that we did not look… but one needs time to be imposed as leader,” the former prime minister said, mentioning the PDL secretary general Angelino Alfano.

He said he was entering the race because polls put the centre-right PDL behind the Italian left.

The PDL abstained from confidence votes in parliament on Thursday – which the government won.

Mario Monti replaced Silvio Berlusconi as prime minister just over a year ago, and launched a programme of reforms aimed at pulling Italy out of economic crisis.

Silvio Berlusconi said his party had given “proof of great responsibility and had supported [Mario Monti’s] technocrat government for a year, seeking to correct policies that are not convincing, whilst insisting that austerity in an economy that does not grow is harmful. And harm has been done”.

The former leader said he had not missed the office of prime minister “not even for a minute” and he was returning out of a “sense of responsibility”.

Referring to his confrontation with the Italian judiciary, Silvio Berlusconi said he saw it with “a great sense of fear because we have to do with an omnipotent judiciary”.

Mario Monti is due to hold talks with the Italian president later.

President Giorgio Napolitano has said he wants to avoid a “turbulent” end to Mario Monti’s technocratic government.

G8 leaders of the world’s most powerful economies say they want debt-stricken Greece to remain in the eurozone.

In their summit communique, G8 leaders also committed themselves to promoting growth alongside fiscal responsibility.

However, the leaders acknowledged “the right measures are not the same for each of us”.

Greece’s possible exit from the eurozone was high on the agenda, following inconclusive elections there.

The leaders of France, Germany, the US, the UK, Italy, Japan, Canada and Russia have been meeting at Camp David in the US state of Maryland.

“We agree on the importance of a strong and cohesive eurozone for global stability and recovery, and we affirm our interest in Greece remaining in the eurozone while respecting its commitments,” the statement said.

The global economic recovery was showing signs of progress, they said, but “significant headwinds persist”.

G8 leaders are divided on whether to continue with austerity or back stimulus measures instead.

German Chancellor Angela Merkel favors austerity, while newly elected French President Francois Hollande wants to pursue policies for greater growth, as does President Barack Obama.

G8 leaders of the world's most powerful economies say they want debt-stricken Greece to remain in the eurozone

G8 leaders of the world's most powerful economies say they want debt-stricken Greece to remain in the eurozone

There are caveats but the first line of the communique – about promoting growth and jobs – means Presidents Obama and Hollande have won the day.

However, it is not clear that Angela Merkel has got their message and is prepared to act on it, our correspondent adds.

US officials said Angela Merkel would hold a one-on-one meeting with Barack Obama later on Saturday.

Italian Prime Minister Mario Monti said there would be another key meeting in June in Rome, where he would host Francois Hollande and Angela Merkel.

Earlier, UK Prime Minister David Cameron called for deficit reduction.

“There is a growing sense of urgency that action needs to be taken, contingency plans need to be put in place and the strengthening of banks, governments, firewalls and all of those things need to take place very fast,” he told reporters at Camp David.

The likelihood of Greece leaving the euro is growing.

The office of the Greek interim prime minister said on Friday that Angela Merkel had suggested the country hold a referendum on euro membership on election day, but the German chancellor’s cabinet dismissed this as “false”.

Greek voters will again go to the polls on 17 June after earlier elections failed to produce a viable coalition to run the country.

A caretaker government was sworn in this week after elections.

Investors fear any refusal by Athens to impose deep spending cuts agreed under a bailout deal could result in the country quitting the bloc of 17 countries that use the euro.

Two opinion polls published on Saturday showed the anti-bailout left-wing Syriza bloc neck and neck with centre-right New Democracy, both on about 25%.

Larger countries such as Spain or Italy struggling to ease their debt loads might then become vulnerable, potentially triggering wider eurozone upheaval and even a global financial crisis to rival the one of 2008.

The G8 summit has now moved on to other issues, including food security, energy and climate, partnerships in North Africa and the Middle East and the war in Afghanistan.

After the G8 summit ends on Saturday evening, most of the leaders will decamp to Chicago to join a larger group of international officials for a NATO summit on Sunday and Monday, at which Afghanistan is expected to be the main item on the agenda.

Three men arrested in Chicago on suspicion of planning to throw petrol bombs at the NATO summit have been charged with conspiracy to commit terrorism and possession of an explosive or incendiary device.

Prosecutor Anita Alvarez said the campaign headquarters of President Barack Obama and the home of mayor Rahm Emanuel were among the targets.

 

Mario Monti has been appointed as the new Italian Prime Minister and has been asked to form a new government to tackle an acute debt crisis which prompted the resignation of Silvio Berlusconi.

Mario Monti, who is an ex-EU commissioner, said he was starting urgent talks on his cabinet, aiming to restore finances.

Most parties, including Silvio Berlusconi’s, approved his nomination.

Italy’s borrowing costs have spiked, threatening the eurozone. Hailing Mario Monti’s appointment, EU leaders vowed to monitor Italy’s austerity measures.

Mario Monti’s candidature was announced after President Giorgio Napolitano spent the day in 17 meetings with senior politicians.

Speaking to reporters shortly afterwards, Mario Monti said Italy should be an “element of strength and not weakness” within the EU.

“We will aim at solving the financial situation, resume the path of growth. [We want to build] a future of dignity and hope for our children.”

Mario Monti has been appointed as the new Italian Prime Minister and has been asked to form a new government to tackle an acute debt crisis which prompted the resignation of Silvio Berlusconi

Mario Monti has been appointed as the new Italian Prime Minister and has been asked to form a new government to tackle an acute debt crisis which prompted the resignation of Silvio Berlusconi

Mario Monti said he would respect the country’s parliament and hold urgent consultations with its political forces.

Mario Monti refused to set a timetable for the formation of a new government, and would not say who he planned to nominate as ministers.

Speaking in a recorded TV address, Silvio Berlusconi said he would support a technocrat government and redouble his own efforts in parliament to modernize Italy.

Most centrists and centre-left parties in the opposition have already pledged their support.

However, Silvio Berlusconi’s main coalition ally, the Northern League, has withheld its support until Mario Monti’s policies have become clear.

Silvio Berlusconi, who had lost his parliamentary majority, resigned on Saturday after new austerity measures were passed by both houses of parliament.

In Brussels, European Commission chief Jose Manuel Barroso and EU President Herman Van Rompuy issued a joint statement welcoming Mario Monti’s appointment.

It sent ” a further encouraging signal… of the Italian authorities’ determination to overcome the current crisis”, they said.

The Commission, they added, would continue monitoring “the implementation of measures taken by Italy with the aim of pursuing policies that foster growth and employment”.

Mario Monti’s appointment comes two days after Greece, under even greater pressure from Brussels, inaugurated a technocrat government to cope with its debt problems.

Mario Monti:

* Born in 1943 in northern Italy

* Taught economics at Turin University for 15 years

* 1994-1999: EU commissioner for internal market

* 1999-2004: EU commissioner for competition

* Rector then president of top Bocconi University in Milan

* On 11 November 2011, sworn in as a senator for life

* 13 November: Nominated PM-designate