Letta Urged to Impose Stability to Aid Italian Economic RecoveryAndrew Frye
Italian Prime Minister Enrico Letta is winning support from business leaders concerned that turmoil within his parliamentary coalition may hurt the country’s attempt to exit its recession.
Executives are speaking out after Italian stocks declined for three weeks, prompted in part by threats from Silvio Berlusconi, the ex-premier who’s now one of Letta’s main allies, to topple the government. Companies, strained by two years of economic contraction, are counting on Letta to ease the fiscal burden and help rebuild the supply of corporate credit.
“The effects of a destabilized government would be truly devastating for companies,” Marcella Panucci, director general of employers lobby Confindustria, said Sept. 4 in an interview broadcast by Radio 24. “It is absolutely necessary that the government be stable and resilient.”
Letta, 47, is struggling to keep his coalition of rival parties together as Berlusconi, 76, fights a motion to expel him from the Senate. The premier, in his push to maintain stability, may get a boost over the next three days as corporate leaders, including the chief executive officers of UniCredit SpA, Telecom Italia SpA and Intesa Sanpaolo SpA, gather on the banks of Lake Como for the annual Ambrosetti Workshop.
Attendees of the Ambrosetti Workshop, where businesspeople and bankers gather with policy makers, pushed for political continuity at last year’s meeting. More than four-fifths of 2012 conference participants said they hoped then-Prime Minister Mario Monti would continue in his role in the coming years, according to a poll by Sole 24 Ore Radiocor.
Berlusconi, himself a three-time premier, toppled Monti’s government in December, three months after the conference.
Some of this year’s attendees have anticipated their message for the group. Federico Ghizzoni, UniCredit’s CEO, said at a Handelsblatt conference in Frankfurt that a government collapse would put an economic recovery at risk, according to a transcript published yesterday by La Repubblica. The recession, Italy’s longest since World War II, eased in the second quarter when the economy contracted 0.2 percent amid gains in business and household confidence.
The benchmark FTSEMIB Index has fallen 4.7 percent since Aug. 16, compared with a 0.6 percent decline in the broader Stoxx Europe 600 Index. Italian 10-year bond yields have risen 36 basis points to 4.55 percent over the same period.
Letta, in his fifth month as premier, has delivered a property tax cut and public spending reductions by meeting Berlusconi’s demands and cajoling lawmakers resistant to collaborating with the ex-prime minister. Letta is seeking to improve the use of European Union funds to fight unemployment and has promised to guard against bond market turmoil by maintaining budget discipline.
Berlusconi faces potential expulsion from parliament because he was convicted of tax fraud and last month exhausted his final appeal. Letta’s Democratic Party, whose members opposed Berlusconi for almost two decades, has said the ouster is warranted under a 2012 anti-corruption law.