Italian Prime Minister Silvio Berlusconi will have to postpone again the release of his next love songs record, titled True Love, after the third European economy has been forced to accept a surveillance action by the IMF and the EU during the introduction of the country’s reform plan.
Italy has committed itself to perform a work reform, relax the restrictions on the corporate sector, change the age retirement from 65 to 67, and introduce a budget deficit limit in the Italian Constitution.
The reason to accept the joint IMF and EU monitoring is that Italy’s risk premium hovers around a dramatic level, over the 450 basis points. The Italian economist Nicola Rossi admits that Italy is the weakest link in the Eurozone.
“The situation is extremely severe. If our interest rates achieve to 7%, the risk will go unmanageable,” says Rossi.
Another piece of bad news for Italy have been the manufacturing PMI indicator, which fell 11 points to 41.1 in October, and as a consequence could take the country closer to the slowdown.
Berlusconi continues to lack support, so that he would even lose a vote of no confidence. In fact, Barclays’ analysts says that Berlusconi could not stay in the government beyond next Monday,
“which would be positive because a coalition government could accelerate the Italian reforms.”
JP Morgan agrees this scenario but also comments that it would leave Italy without government for some months.