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Newspapers reported that Silvio Berlusconi will resign soon, perhaps in the next few hours. This has been denied by Mr Berlusconi himself (after all it would be in contrast with his repeated determination not to step down as long as he is proved to have a majority). However, the situation is fluid and might evolve throughout today.
Irrespective of whether he steps down spontaneously or not, we think the clock is ticking for him and the option of a change of guard followed by a technical government is becoming the only way forward. In the coming weeks there are two key events to watch out for, which might be decisive for Berlusconi‟s government:
- Tomorrow at the latest, the government will vote in the Lower House on the so- called “Rendiconto di Stato” (Article 1 of the 2010 budget account, over which the government lost a parliamentary vote on 12 October 2011). It will be a tough test, given that Mr Berlusconi‟s majority is getting thinner. It currently stands at around 314, 2 votes below the 316 necessary to pass the bill. However, there are around 15 MPs who have not yet decided how they will vote, so the vote hinges upon them.
- Between today and tomorrow the so-called maxi-amendment (that will be attached to the 2012 Budget Law and that will contain the agenda to implement the structural reforms included in the letter sent to the EU on 26/27 October) will be presented in the Senate. More work seems to be needed, given that after last week‟s cabinet meeting no official document has yet been published, and details are missing on two key reforms: the pension and the labour market reforms. The “Commissione di Bilancio” of the Senate will have until Tuesday 15 November to scrutinise the proposal. On 15 November the Senate will vote on both the 2012 Budget Law and the amendment, and a confidence vote will be attached.
What could happen tomorrow?
- If the government does not get a majority tomorrow, it may call a confidence vote. If it then loses the confidence vote, Mr Berlusconi will need to convene with the President, Giorgio Napolitano, on the next steps. It would then be up to President Napolitano to dissolve parliament, if he judges that the government is not backed by a majority, and form an interim government.
- However, even if the government survives tomorrow‟s vote, Mr Berlusconi will likely meet with President Napolitano to discuss the next steps, give the fragility of the political situation at this stage. Mr Berlusconi will likely reiterate his unwillingness to step down and his wish to continue to govern, but at this stage he will probably support early elections once the Stability Law (the 2012 budget law) is approved.
We believe that at this stage the only possibility is to form a new unity government headed by a “super-partes” personality, who should be able to give credibility back to Italy and press ahead with reforms. A technical government, headed by Mario Monti, looks the main possibility. Mr Monti would be highly supported by both the main oppositions parties, UdC and PD, and likely by many of Mr. Berlusconi‟s Popolo delle Liberta‟ MPs (who would support him only once the Berlusconi government had collapsed). A technical government headed by Mr Monti and supported by a large majority would be a positive step forward, in our view.
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