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29 Sep 2013
Italian political crisis deepens
FXstreet.com (Barcelona) - Italian PM Enrico Letta is between a rock and a hard place after five ministers in Berlusconi’s party resigned from the fragile government coalition over the weekend, resulting in the near collapse of the government.
Talk has it that failed negotiations to postpone a planned sales tax hike was the last straw leading to the current political crisis. While the government may try a last desperate attempt to put together a fresh coalition, President Napolitano said he doesn't rule out to dissolve parliament, although only as option of last resort, adding "political situation remains uncertain."
Silvio Berlusconi, after pulling his ministers out of the government, has already started a campaign calling for new elections. Meanwhile, Italian PM Letta is reported to appear before parliament and outline a plan to move forward, with the latest suggesting he will seek confidence vote in parliament on Wednesday.
In view of Nicholas Spiro, head of Spiro Sovereign Strategy, who was cited by Reuters: "Markets have grown accustomed to Italy's dysfunctional politics but there's a sense that things are now spinning out of control, with potentially dangerous consequences for both Italy and the euro zone." The government's collapse will only delay crucial reforms in the country.
Talk has it that failed negotiations to postpone a planned sales tax hike was the last straw leading to the current political crisis. While the government may try a last desperate attempt to put together a fresh coalition, President Napolitano said he doesn't rule out to dissolve parliament, although only as option of last resort, adding "political situation remains uncertain."
Silvio Berlusconi, after pulling his ministers out of the government, has already started a campaign calling for new elections. Meanwhile, Italian PM Letta is reported to appear before parliament and outline a plan to move forward, with the latest suggesting he will seek confidence vote in parliament on Wednesday.
In view of Nicholas Spiro, head of Spiro Sovereign Strategy, who was cited by Reuters: "Markets have grown accustomed to Italy's dysfunctional politics but there's a sense that things are now spinning out of control, with potentially dangerous consequences for both Italy and the euro zone." The government's collapse will only delay crucial reforms in the country.