Europe is expected to accelerate a shift away from its austerity-first agenda this week as the new Italian government changes course and a German-Spanish investment pact underscores a renewed focus on combating record unemployment. This comes on the background of much criticized statements from European Commission president Jose Barroso who said ‘austerity was over’.
Silvio Berlusconi, the three-time prime minister and two-time convicted lawbreaker seems to be the great victor in Italy by out-manoeuvring rivals during an eight-week political stalemate and becoming the key figure in talks for a new coalition government.
The leader of Italy's anti-establishment 5-Star Movement, Beppe Grillo, criticised the re-election of President Giorgio Napolitano as a desperate attempt to retain power by a discredited establishment.
Italy's parliament failed to elect a new state president in the first two votes on Thursday with a centre-left rebellion against leader Pier Luigi Bersani torpedoing his official candidate and prolonging a political stalemate.
Italian centre-left leader Pier Luigi Bersani confirmed he would meet his centre-right rival Silvio Berlusconi soon, but held out little hope of a breakthrough in the political stalemate since February's inconclusive election.
Italian President Giorgio Napolitano ruled out standing down early to make way for new parliamentary elections, following the failure of attempts to form a government this week. He stressed that Prime Minister Mario Monti retained full authority at the head of a caretaker administration until a new government can be formed
The head of Italy's centre-left bloc has hit an impasse in his efforts to form a government and said only a mentally ill person would want to govern Italy now. Pier Luigi Bersani was rebuffed by the anti-establishment Five Star Movement on Wednesday.
Italy's anti-establishment Five Star Movement has officially asked President Giorgio Napolitano for a mandate to form a new government. The party led by comedian Beppe Grillo won an unexpected 25% of the vote in elections last month and holds the balance of power.
Italian President Giorgio Napolitano appealed to political leaders to work together to form a government, but his appeal fell on deaf ears and pressure grew for a new poll after last month's deadlocked election. The situation is dominated by the ‘Grilusconi’ phenomenon which mustered a 55% protest vote.
Ratings agency Fitch added to Italy's mounting problems this week by cutting its credit rating due to the political uncertainty after last week's election, deep recession and rising debt. Fitch lowered Italy's sovereign rating by one notch to BBB plus, with a negative outlook, raising the risk that its next ratings change will be a further downgrade.