Monti Resigns as Italian Prime Minister After 13 Months
Italian Prime Minister Mario Monti resigned, ending a 13-month tenure and clearing the way for elections that will focus on his crisis-fighting austerity policies.
The appointed premier submitted his resignation today to President Giorgio Napolitano, according to a statement from the president’s office. Napolitano asked Monti’s Cabinet to remain in power to handle routine government administration. Monti stepped down after lawmakers passed a 2013 budget law. The president has suggested Feb. 24 as the date for elections.
Monti 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.
Monti, who has never sought elected office, may use a Dec. 23 press conference 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.
The yield on 10-year bonds, which surged to 7.26 percent on Nov. 25 last year, past the level that had prompted Ireland, Greece and Portugal to seek bailouts, was 4.47 percent today. 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 bonds is little changed from before Monti’s Dec. 8 announcement that he’d resign. Elections must be held by May. Monti decided to quit after Berlusconi’s People of Liberty party withdrew its support for the government.
Most polls indicate the Democratic Party led by Pier Luigi Bersani, a former communist, will win the election with about 30 percent of votes. A protest group led by comedian Beppe Grillo, who has suggested Italy leave the euro, trails with 20 percent before Berlusconi’s PDL with between 15 and 20 percent.
Monti’s 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. 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’s 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.