Italian Parliament Passes Budget, Paving Way for Confidence Vote
Italy’s upper house of Parliament passed the budget bill for 2011, paving the way for a confidence vote next week that threatens to bring down the government led by Prime Minister Silvio Berlusconi.
The plan, first approved by the lower house on Nov. 19, includes cuts totaling 11.6 billion euros ($16 billion) to trim the deficit to 5 percent of gross domestic product.
Last month the Parliament’s speakers and Italy’s President Giorgio Napolitano agreed that the legislature would pass the budget before voting on the fate of the government on Dec. 14.
The government can no longer count on a majority in the 630-member lower house, according to Italo Bocchino, secretary of the Future and Liberty for Italy Party, formed by Berlusconi’s former ally Gianfranco Fini. The prime minister is expected to have enough backing in the upper house.
Berlusconi has criticized Fini for provoking the possible fall of the government at a time when the spread of the European debt crisis is already shaking investor confidence in the bonds of high-debt nations such as Italy. The premium investors demand to hold 10-year Italian bonds instead of German equivalents reached a euro-era high of 212 basis points on Nov. 30. It was at 156.6 basis points today.
Italy may miss its goal of cutting the budget deficit to below 3 percent of gross domestic product in 2012 if growth proves weaker than the government’s projected 1.2 percent this year and 1.3 percent in 2011, the Organization for Economic Cooperation and Development said in a report on Nov. 18.
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