Il Sole 24 0re, the financial newspaper controlled by Italy’s employers lobby, called on Prime Minister Silvio Berlusconi to resign, highlighting the growing rift between the premier and the country’s top executives.
“The country most at risk now after Greece is Italy and this is due to the fragility of your governing coalition, the chain of embarrassing scandals that have directly touched you, your ministers and your closest collaborators, and the consistent incapacity to make painful, but necessary decisions,” Roberto Napoletano, the newspaper’s editor-in- chief, wrote in a front-page editorial.
The article titled “For Italy, Above All” came a day after Standard & Poor’s cut the country’s credit rating for the first time in five years, citing weak growth, high debt and a “fragile” government. Berlusconi’s legal woes are also occupying the prime minister at a time when his government is trying to respond to soaring borrowing costs that prompted the European Central Bank to buy its bonds to try to stem contagion.
“It is a very clear sign of mistrust,” said Roberto d’Alimonte, professor of politics at Luiss University in Rome. “The business world has abandoned Berlusconi, even if the Parliament hasn’t done it yet.”
Berlusconi is currently under indictment in four corruption cases that include charges of paying a minor for sex and may face a fifth indictment in another case tomorrow, requiring court appearances. Parliament will also vote tomorrow on whether to allow the arrest of Marco Milanese, a lawmaker for Berlusconi’s People of Liberty party and former top aide of Finance Minister Giulio Tremonti, on graft charges.
Berlusconi denies any wrongdoing and says prosecutors are out to destroy him politically. His office also said in a statement yesterday that S&P’s decision appeared “dictated more by newspaper speculation than by reality, and appear influenced by political considerations,” adding that Italy will meet its goal to balance the budget in 2013.
The yield on Italy’s 10-year bond is approaching 6 percent, six weeks after the ECB began buying the securities to prevent Italy from being engulfed by the region’s debt crisis. Berlusconi secured ECB support by crafting an austerity plan to eliminate the budget deficit. Bond yields began to creep up again as Berlusconi’s allies initially sought to water down the plan, removing key revenue measures and spooking investors.
Berlusconi will meet President Giorgio Napolitano around 7 p.m., Il Sole reported on its website, citing unidentified government officials. Berlusconi decided to meet Napolitano to discuss the current situation and explain what the government plans to do to boost growth, the daily said.
News of the meeting prompted speculation Berlusconi planned to step down, hurting shares of traded companies linked to the premier. Mediaset SpA (MS), Berlusconi’s broadcaster, dropped as much as 4.9 percent in Milan trading. Arnoldo Mondadori Editore SpA, the publisher he controls, dropped as much as 4 percent while Mediolanum, the financial-services company partly owned by Berlusconi, lost 2 percent compared with a 1.2 percent decline in the benchmark FTSE MIB index.
“The time for nebulous, unspecified and non-detailed commitments is gone,” Fiat SpA Chief Executive Officer Sergio Marchionne said yesterday in London. The “whole question about austerity is crucial,” he said when asked what Italy should do to boost credibility after S&P lowered its rating to A from A+.
Berlusconi enjoyed broad support from employers lobby Confindustria and the Italian business community when he entered politics in 1994 on promises to channel his experience building Italy’s biggest media company into running the nation like a chief executive rather than a politician. He pledged tax cuts and structural reforms to make Italy more completive and unleash the country’s growth potential.
His failure to deliver, his legal woes and the country’s anemic growth have strained relations with the business class, leading to the rupture with Confindustria, which represents more than 146,000 companies employing 5.4 million workers. Italy has had average annual growth of 0.9 percent since Berlusconi was elected to his first of three terms in 1994, compared with 1.6 percent for the euro region.
“The government must make serious, strong and unpopular reforms” or it “should just go home,” Confindustria President Emma Marcegaglia said yesterday in Bologna, Italy.
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