Italian Prime Minister Enrico Letta urged his allies to embrace the deal that brought them to government with rivals and take inspiration from the strength of Silvio Berlusconi, their adversary-turned-partner.
“You get scared and don’t make these choices if you’re scared of your own identity, if you think you have a weak identity,” Letta said today in his first speech as premier in the Italian Senate. “I don’t think Silvio Berlusconi is someone with a weak identity, unless I have misunderstood his character.”
Letta, 46, is in the Senate for a confidence vote to install his government before he heads to Berlin to meet German Chancellor Angela Merkel later today. Merkel, who came to power in 2005 with the support of a broad coalition, may be in a position to give Letta pointers on keeping his alliance intact.
Investors and European leaders got a first look at Italy’s new compromise government yesterday when Letta set out his economic-growth program and won a confidence vote in Italy’s lower house of parliament. He reaffirmed Italy’s commitment to budget rigor and proposed tax cuts for business, consumers and homeowners, without giving full details about how the plan would be funded.
“It’s clear that this government will have a difficult balancing act to perform,” said Riccardo Barbieri, chief European economist at Mizuho International Plc. Letta’s plan may require savings of about 10 billion euros ($13 billion), according to Barbieri.
Italian 10-year bond yields fell 2 basis points to 3.89 percent at 1:42 p.m. in Rome, after ending yesterday at a two-and-a-half year low. The difference between yields on similar maturity German bunds narrowed 1 basis point to 2.7 percentage points.
Italy is struggling through its second year of recession and bears the second-largest debt load in the euro area, after Greece. Letta, who emerged as a leader in Parliament only last week, is taking over for Mario Monti, who guided Italy through the European debt crisis by raising taxes and prodding Merkel into endorsing collective action in the European Union.
“In Europe and internationally, Italy will find strategies to boost growth without compromising the necessary process of restructuring of public finances,” Letta said yesterday in a speech to the lower house of parliament, the Chamber of Deputies.
Merkel, 58, called Letta yesterday to congratulate him on his appointment and invite him Berlin. The two heads of government didn’t speak in detail about Italian policy, said Steffen Seibert, Merkel’s chief spokesman.
Letta came to power this week after uniting his Democratic Party and Berlusconi’s People of Liberty to end the eight weeks of parliamentary deadlock that followed inconclusive elections Feb. 24-25. His embrace of Berlusconi, the billionaire, three-time ex-premier, was a reversal after the Democratic Party ran against People of Liberty in the election campaign this year and shunned a deal with the group after the vote.