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Italian Senate Set for Budget Vote Before Monti Resigns

December 20, 2012

Italy Senate to Vote on Budget as Monti Prepares to Resign

Italian Prime Minister Mario Monti’s Dec. 8 announcement that he’ll resign as soon as the budget is passed came after former Premier Silvio Berlusconi’s party withdrew its support for the government. Photographer: Olivier Morin/AFP/Getty Images

The Italian Senate approved the 2013 budget, paving the way for Prime Minister Mario Monti to step down before early elections next year.

Lawmakers in the upper house voted 199 to 55 to pass the budget law, with 10 abstentions. The bill will now go to the Chamber of Deputies for final approval in a vote that will take place tomorrow, Ansa newswire reported today.

Monti announced on Dec. 8 that he’ll resign as soon as the budget is passed after former Premier Silvio Berlusconi’s party withdrew support for the government and the 76-year-old tycoon tossed his hat back into the political ring. Monti is under pressure from euro-area and business leaders as well as Italian politicians to join the election campaign after helping restore investor confidence in the euro area’s third-biggest economy.

“Investors are struggling to come to grips with what has become an extremely uncertain and volatile political climate in Italy,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by e-mail yesterday. “We very much doubt whether markets have adequately priced in the risks surrounding the election.”

Bonds Gain

The yield on Italy’s benchmark 10-year bond was little changed at 4.4 percent at 2:47 p.m. in Rome. The yield was 7 percent on Nov. 16 last year, the day Monti took office when Berlusconi’s government collapsed struggling to ward off Europe’s debt crisis.

Monti, 69, an economist and former European Union commissioner, yesterday postponed a year-end press conference scheduled for Dec. 21, when he had been expected to clarify his political future.

Monti will probably address the issue on Dec. 22 or Dec. 23 after the lower house gives final approval to the budget, International Cooperation Minister Andrea Riccardi said in Rome yesterday. He declined to say whether Monti will run as a candidate for premier.

Monti may endorse a unified list of candidates and take part in the election campaign, daily la Repubblica reported today, without citing anyone. Monti would return as premier if the list won the election, according to the newspaper.

Feb. 24 would be the most convenient date for elections, Interior Minister Anna Maria Cancellieri told President Giorgio Napolitano yesterday, according to an e-mailed statement. Italy’s head of state said he will evaluate her proposal.

Berlusconi’s Offer

Berlusconi, who first signaled his intention to run again on Dec. 5, last week offered to pull out of the race if Monti leads a coalition of “moderates” including his People of Liberty party and his former Northern League ally, which unlike the PDL never supported the current government.

Monti met yesterday in Rome with Union of Centrists party leader Pier Ferdinando Casini and Toward a Third Republic movement leader Luca Cordero di Montezemolo, who is chairman of carmaker Ferrari SpA. Both men are encouraging Monti to run.

While Monti is a favorite of many European political and business leaders, polls indicate he would struggle to win the support of voters weary of his spending cuts and tax increases, which helped push Italy into its fourth recession since 2001.

In a Dec. 14 poll by SWG Institute, 61 percent of respondents said Monti shouldn’t run. If Monti runs his probable coalition would only win 15 percent of the vote, about half that of the Democratic Party, or PD, which backs the government.

PD leader Pier Luigi Bersani, a former communist, is the front-runner to succeed Monti. The 61-year-old, backed by Italy’s labor unions, has pledged to continue Monti’s budget rigor.

Next President?

If he decides not to run and the Democratic Party wins the elections, Monti may be available to become the next president, succeeding Giorgio Napolitano whose term ends in May, or to serve as finance minister in the new government, UniCredit SpA (UCG) Milan-based economists including Chiara Corsa wrote in a Dec. 13 research note.

While Italy’s debt rose above 2 trillion euros ($2.66 trillion) for the first time in October and the economy contracted for a fifth quarter, Italy is still running a surplus after interest payments. The country will be alone among the euro area’s so-called peripheral states to bring its deficit within the European Union’s limit this year.

“Italy should be careful not to erode the credibility capital accumulated by Monti so far,” Barclays Plc economists including London-based Fabio Fois said in an e-mailed note. “His commitment to assuming a central role in Italian politics would be the best way to preserve that in the eyes of Italy’s European partners and financial markets.”

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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