Monti to Resign Today After Italy Budget Law Is Passed
Italian Prime Minister Mario Monti will resign today after the budget bill gets final approval by parliament, a person familiar with the situation said.
Monti will tender his resignation to Italian President Giorgio Napolitano after Parliament approves the budget legislation, said the person, who asked not to be named before an announcement is made. The Cabinet will meet at 7 p.m. in Rome, Monti’s office said today in an e-mailed statement.
Monti, who’s under increasing pressure to run in next year’s elections, is expected to announce his political plans at a press conference on Dec. 23 at 11 a.m. in Rome. He took over last year just as Italy risked becoming the next victim of Europe’s debt turmoil under former Premier Silvio Berlusconi. While he’s overseen a recovery in Italy’s bonds and repaired its tattered standing abroad, his agenda left Italians with higher taxes, rising unemployment and a shrinking economy.
“Markets remain remarkably complacent about Italian political risk, notwithstanding the stabilizing effects of the ECB’s bond-buying programme,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by e-mail.
The yield on 10-year Italian bonds, which surged to 7.26 percent on Nov. 25 last year, past the level that prompted Ireland, Greece and Portugal to seek bailouts, was 4.49 percent as of 3:30 p.m. in Rome. The gap with similar-maturity German bunds was 310 basis points, down from a 2011 high of 553 basis points, as the European Central Bank’s bond-buying program buoyed Italian debt.
The yield on Italian 10-year debt is little changed from before Monti’s Dec. 8 announcement that he planned to resign because Berlusconi’s party withdrew its support for the government.
Monti, who has never sought elected office, may use the press conference on Dec. 23 to announce whether he’ll sit out the election, or heed the call of a group of centrist political parties who want him to run on a platform of continued reforms for the euro zone’s third-largest economy.
“Although Mr Monti has not yet thrown his hat into the ring, he has given plenty of indications that he is preparing to run for office as the head of a centrist alliance,” said Spiro. “Many will be hanging on his every word at his end-of-year press conference.”
Most polls indicate the Democratic Party led by Pier Luigi Bersani, a former communist, will win the election with about 30 percent of the vote. A protest group led by comedian Beppe Grillo, who has suggested Italy may consider leaving the euro, trails with 20 percent. Berlusconi’s PDL is forecast between 15 percent and 20 percent.
Monti is being courted by a group of small parties led by Catholic politician Pier Ferdinando Casini and Luca Cordero di Montezemolo, the Ferrari SpA chairman. Berlusconi has said he’d step aside and endorse Monti if he led a coalition with his PDL and former Northern League ally, but not the Democratic Party. A Monti coalition would win about 15 percent of the vote, said Maurizio Pessato, vice-president of polling company SWG SpA.
A former adviser to Goldman Sachs Group Inc., Monti imposed 20 billion euros ($26.5 billion) in austerity measures as prime minister. He raised taxes, cut spending, increased the retirement age and overhauled labor rules to make firing easier. The policies have left Italy on track to cut its deficit within the European Union target of 3 percent of output this year.
Monti’s rule has been praised in recent days by German Chancellor Angela Merkel and other European leaders such as Jean-Claude Juncker, who heads the group of euro-area finance ministers. His policies find less favor at home.
Italy’s economy is in its fourth recession since 2001, and will contract 2.1 percent this year and 0.6 percent in 2013, employer lobby Confindustria forecast on Dec. 11. The jobless rate is at a 13-year high of 11.1 percent.
A Nov. 17 poll by Datamonitor showed that 62.5 percent of Italians had a negative view of the Monti government, 82.4 percent had little or no confidence in the economy improving, and 81 percent said they had not been able to save in the past three months. The poll questioned 1,000 people. No margin of error was given.
Monti has been mentioned as a possible successor to President Napolitano, whose term in the largely ceremonial post ends in May. Bersani said Dec. 13 that he’d like Monti to remain “engaged” in public service after the elections.