12 Nov 2011

Berlusconi resigns as Italy’s prime minister

Silvio Berlusconi’s offer to resign as Italian prime minister has been accepted by President Napolitano, paving the way for his likely replacement by technocrat Mario Monti.

Mr Berlusconi promised to resign once parliament passed the package of economic reforms demanded by Italy’s European partners to restore confidence in Italy’s public finances.

His resignation brings to an end one of the most colourful – and scandal-plagued – areas in the country’s post-war history.

Mr Berlusconi’s successor faces a deepening financial crisis which has Italy’s debt costs to unmanageable levels and threatened to escalate into a eurozone-wide emergency.

Yields on Italian 10-year bonds soared to more than 7.6 per cent earlier this week, prompting fears that Italy would have to seek an international bailout.

The prospect of a new, technocrat-led government calmed market fears, and yields dropped to below the critical 7 per cent level.

Under pressure

Mr Berlusconi, fighting scandals and facing trials on charges ranging from tax fraud to paying for sex with an under-aged prostitute, has been under pressure to resign for several weeks.

Talks with Italian political parties are expected to start on Sunday morning, with hopes that a new government can be in place by the time financial markets open on Monday morning.

Mr Monti and Mr Berlusconi shared a working lunch before today’s vote, suggesting that the outgoing government will not try to block a quick handover. But the attitude of the centre-right as a whole remains unclear.

Read more: How did Silvio Berlusconi survive for so long?