Prime Minister Enrico Letta has comfortably survived a confidence vote in his government, with 235 votes in favour of the government continuing and 70 against. The issue blew up supposedly over an increase in VAT which was stridently opposed by Silvio Berlusconi who ordered five ministers from his People of Freedom Party to resign from the coalition government.
More cynical observers believe that the motive was more closely related to moves by the former Prime Minister to avoid the Senate voting to exclude him, following his conviction on tax fraud charges and for paying for sex with an underage prostitute.
Given that Italy is struggling with 12.2% unemployment, a record high of 3.13 million people, with youth unemployment hovering around the 40% mark, now is not the time for the instability that an election would provoke. The economy has been in recession since the end of 2011 and shrank by a further 0.3% in Q2 of 2013. The rate of contraction in the Italian economy has eased, however, over the last three quarters: 0.9, 0.6 and 0.3% respectively.
The Italian public debt stands a little below the €2.1 trillion mark, the equivalent of 130% of GDP. The Italian economy is the third largest in the Eurozone, behind Germany and France.
Prime Minister Letta refused to accept the resignation of the five People of Freedom ministers, calling for Wednesday’s confidence motion instead. Over the course of the last few days, it had become obvious that Berlusconi’s move was hugely unpopular. Berlusconi faced a rebellion from within his own ranks and unexpectedly backed down yesterday.
In a statement to the Senate, Mr Berlusconi explained: “Italy needs a government that can produce structural and institutional reforms. We have decided, not without internal travail, to back the confidence vote.” Given that this statement was just as true before the weekend when he vowed to bring down the government, it tends to suggest that his motivation was indeed personal.