Dec. 11 (Bloomberg) -- Former Premier Silvio Berlusconi said Italy’s bond yield difference with Germany is a “scam” and Prime Minister Mario Monti’s policies have made the economy worse than when he was in power.
“Monti’s government has followed the Germany-centric policy that Europe has tried to impose on other states and it has produced a crisis that is much worse than when we were in power,” the 76-year-old billionaire said in an interview today on Canale 5 television, controlled by his Mediaset SpA broadcast company.
Berlusconi said the excessive focus on the difference between Italian bonds and comparable German bunds was used to bring down his government a year ago. That gap reached a euro-era record 575.6 basis points on Nov. 9, 2011, days before he resigned and Monti was appointed to lead an unelected government of non-politicians.
“We should stop talking about this scam. We never used to talk about it; why does it matter?” Berlusconi said about the spread. “It has been used to try to bring down a majority government voted by the Italians. Behind the crisis there has been a German strategy,” he said.
Berlusconi is stepping up his anti-European rhetoric since announcing he would seek the premiership for a sixth time and breaking with the Monti government, prompting the premier to announce his intention to resign. Italy’s risk premium has widened 40 basis points in the past week to 342 basis points as Berlusconi’s return upended the Italian political landscape.
Italian bonds gained today, recovering some of yesterday’s decline. The 10-year yield fell 7 basis points to 4.75 percent, after jumping 29 basis points yesterday in the first day of trading after Monti announced his intention to resign.
Giorgio Squinzi, head of employer’s lobby Confindustria, responded by saying that “the spread is important because it directly impacts the cost of our public debt,” he said in Rome today.
Italy spends about 5 percent of gross domestic product funding the euro-region’s second-biggest debt, currently at more than 126 percent of GDP. The Treasury will need to sell more than 400 billion euros ($519 billion) in bills and bonds next year to cover maturities and finance the deficit.
Monti said on Dec. 8 that he will submit his resignation after the 2013 budget law is passed. Senate leaders set that budget vote for Dec. 18, news agency Ansa reported. That will allow the Chamber of Deputies to give it final approval by the end of next week. President Giorgio Napolitano will then dissolve Parliament, with Monti probably remain acting premier until the election.
The general elections may be held either Feb. 17 or Feb. 24, Interior Minister Anna Maria Cancellieri said yesterday in Rome.
The former European Union competition commissioner said yesterday he’s not considering running in the elections at the moment. Monti may reverse that pledge, said Riccardo Barbieri, chief European economist at Mizuho International Plc in London.
Monti “cannot declare his intentions at this stage, as that may endanger the final ratification of Italy’s Stability Law -- the 2013 budget -- and of other urgent legislation before parliament is dissolved,” Barbieri said.
Monti is being lobbied to engage in the campaign by a coalition of centrist parties that support his overhaul of the Italian economy. Ferrari SpA Chairman Luca Cordero di Montezemolo has formed a political party to run on a pro-Monti platform and has been in talks with the Union of Centrists and the Future and Liberty for Italy party to form a coalition.
“If a credible centrist alliance is formed over the next two weeks or so, and assuming that other European capitals keep urging him to stay on as prime minister, Mr. Monti may be persuaded to accept the nomination to prime ministerial candidate of the centrist parties,” Barbieri wrote.
Berlusconi’s People of Liberty party, which according to a Dec. 7 poll by the SWG Institute would get less than 14 percent in elections, is trying to broaden its appeal by rebuilding an alliance with the Northern League and the party may change its name before the vote, Berlusconi said today.
“People of Liberty is a very beautiful name, but everybody uses PDL, an acronym that doesn’t transmit emotion,” Berlusconi said.
Berlusconi also said that former members of the National Alliance party that are now part of the PDL, may break away and form a new party, which would help create a broader right-of-center bloc in the election. Berlusconi said he supported the move as the current election law rewards the coalition with the most votes rather than the party with the biggest support.
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