Monti to form new Italian government

Italian President Giorgio Napolitano has had to move quickly to find a replacement for Silvio Berlusconi before the markets open on Monday morning. Political uncertainty caused yields on Italian bonds to soar last week.

Mr Monti, a former European commissioner, will aim push through reforms agreed with eurozone leaders by his predecessor to cut Italy’s massive 1.9tr euro debt and revive its stagnant economy.

In a message to supporters, Mr Berlusconi has suggested he does not believe his political career is over and that he is not to blame for Italy’s financial woes.

“I share your spirit and I hope we can resume the path to government together,” he wrote in a letter to La Destra, a neo-fascist grouping holding its national congress in Turin today.

“I regard with pride what we managed to achieve in the last three and a half years, which were marked by an unprecedented international crisis.”

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

Opposition to Monti

Opposition voices have already been raised against the technocrat. Angelino Alfano, secretary of Mr Berlusconi’s PDL party, said members strongly opposed a Monti government – despite a conditional offer of support from its leadership.

“We have huge opposition even to the idea of supporting a Monti government from the outside,” he told state television.

I hope we can resume the path to government together. Silvio Berlusconi

And Roberto Maroni, the outgoing interior ministery and a senior figure in the Northern League, has confirmed that his party will oppose the new government.

“The decisions which Monti will take must pass in parliament, and I think that with such a heterogeneous majority he will have many problems. I believe this solution will lead to many problems,” Mr Maroni said.

The Northern League is strongly opposed to pension reform that would hit older voters, who are among its key supporters.

Lisbon treaty reform

Meanwhile it has emerged that German Chancellor Angela Merkel wants speedy reform of the EU’s Lisbon treaty in the wake of recent turbulence in the eurozone.

“The (German) government is pushing for a limited amendment to the treaty to allow greater influence over states that bust budget rules and greed obligations on stability and consolidation,” a source told the Reuters news agency. “This should be done and dusted by the end of 2012.”

Earlier today former UK prime minister Tony Blair warned that a collapse of the euro would be “catastrophic”.

Speaking on BBC TV, Mr Blair said there “whole weight” of European institutions – including the European Central Bank – had to get behind the euro if it was to survive.