Italian bond yields spike again after Berlusconi vote
Italian prime minister Silvio Berlusconi faces renewed calls to resign after he failed to secure a parliamentary majority in a budget vote among MPs.
Berlusconi’s coalition won 308 votes out of a total of 630 in a vote to approve Italy’s national accounts for 2010, eight short of an absolute majority, as the Italian opposition increased calls for him to stand down.
Italian 10-year bond yields, which had reached highs of 6.74% earlier on Tuesday before easing after the European Central Bank intervened with another round of bond purchases, rose to a new euro-era high of 6.75% in the aftermath of the vote.
Opposition leader Pier Luigi Bersani said Italy ran the risk of losing access to financial markets if Berlusconi did not step down immediately.
“I ask you, Mr Prime Minister, with all my strength, to finally take account of the situation…and resign,” Bersani said, according to Reuters.
“The hope will be that Italy can quickly gain a new government with the stomach and the ability to implement major structural reforms. But this alone will not solve Italy’s woes,” said Ben May, European economist at Capital Economics.
“Even if structural reforms are quickly implemented, it will still probably take a decade or more of wage and cost deflation for Italy to regain competitiveness within the euro-zone, implying that the economy may suffer another decade of near stagnation.”