April 24 (Bloomberg) -- Enrico Letta, deputy secretary of Italy’s biggest political party, was designated prime minister in an appointment that portends an end to political gridlock and marks a generational shift in government.
The 46-year-old career politician accepted the mandate today from President Giorgio Napolitano, 87, and said he would begin consulting political parties tomorrow on forming a government. Letta’s Democratic Party lacks a parliamentary majority, meaning the new premier will have to strike alliances with rival lawmakers to pass legislation.
“I am appealing to all political forces and their sense of responsibility,” said Letta today to reporters at the presidential palace. “All of the essential reforms must be done together with the largest possible participation.”
Inconclusive elections in February left Italy struggling to build a government strong enough to confront the country’s longest recession in at least 20 years and defend its interests in the European Union. Letta, the third-youngest Italian premier since World War II, will probably turn to ex-Premier Silvio Berlusconi, the Democratic Party’s main adversary, for the parliamentary support he needs to govern.
Letta said the situation remained “very difficult and fragile.” He called for shrinking the size of Parliament and revamping the country’s election law, which contributed to the hung Parliament. He also said Italy will work to change European Union economic policy, which “pays too much attention to austerity.”
He promised to report back to Napolitano “as soon as possible” on whether he can garner enough support to build a majority in Italy’s divided Parliament.
“Finally we have a young person like in the rest of the EU,” said Mario Spreafico, who manages 1.5 billion euros as chief investment officer at Schroders Private Banking for Italy. “He is a professional, who is widely appreciated, and he has always been a moderate.”
U.K. Prime Minister David Cameron is 46, while French President Francois Hollande and German Chancellor Angela Merkel are both 58. Italian Prime Minister Mario Monti was 68 when he formed his government in November 2011. Berlusconi sought another term in the February vote at the age of 76.
The yield on Italian 10-year government bonds rose 6 basis points to 4 percent, after closing below 4 percent yesterday for the first time in more than two years.
Letta will have to unite the disparate forces in Italy’s Parliament to ultimately resolve the eight weeks of gridlock since inconclusive elections Feb. 24-25. The former European affairs and industry minister will start with Berlusconi’s People of Liberty party, the second-biggest parliamentary force.
Parliament needs a deal to replace Monti’s caretaker administration and provide Italy with a government capable of passing economic stimulus and defending the country from bond-market speculation. An alliance may be easier to strike since last week after Pier Luigi Bersani, who spurned a deal with Berlusconi, relinquished leadership of the Democratic Party.
The Democratic Party, or PD, and People of Liberty demonstrated a willingness to work together after Bersani’s departure. The two parties united on April 20 in a parliamentary vote that gave Napolitano a second seven-year term as head of state. Beppe Grillo’s Five Star Movement, the third-biggest group in parliament, has reiterated its refusal to enter into an alliance.
Berlusconi reiterated his call for an alliance with the PD after his meeting with Napolitano yesterday, telling reporters that his party wanted “a strong government that can take important decisions and that won’t be short-term.”
Letta worked as the PD’s deputy secretary starting in 2009 and assumed a leadership in the party this week after Bersani’s departure. He is the nephew of Gianni Letta, an adviser to Berlusconi who served as deputy prime minister in the billionaire’s last government. He served as Industry Minister for 18 months in the governments of Massimo D’Alema and Giuliano Amato. He became the youngest minister in the history of the Italian Republic when he was given the portfolio for European Affairs in 1998 at the age of 32.
He earned a law degree from the University of Pisa and a PhD in 2001 from Sant’anna School of Advanced Studies in Pisa with a thesis on European Community law.
Giovanni Goria was the youngest post-war Italian premier at 43 when he took control of the government in 1987. Amintore Fanfani, was still 45 when he headed his first government in 1954.
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