Bond alarm as Italy’s Monti set to take over as PM

ROME: Italy’s Mario Monti was set to replace Silvio Berlusconi as prime minister on Wednesday after striking a deal on his new cabinet as bond rates hit dangerous highs and Europe held its breath.


The former Eurocrat was scheduled to meet with President Giorgio Napolitano at 1000 GMT before he is officially sworn in, Italian media reported.


There will then be a handover of power ceremony with the colourful Berlusconi.


The composition of the new government could also be unveiled on Wednesday and a confidence vote on the cabinet could come as early as Thursday, with global leaders urging Italy to speed up and fight an unprecedented debt crisis.


Monti has been locked for two days in talks with political leaders, trade unionists and business associations, as well as representatives of women’s and youth groups to try and build a consensus behind painful reforms.


The ex-commissioner — who famously won cases against US giants Microsoft and General Electric — has warned that Italians face “sacrifices” ahead but has also said he will struggle for “social equity” and “a true civil society”.


“Monti is our last chance to become credible again,” Emma Marcegaglia, head of the main employers’ group Confindustria, said after meeting him on Tuesday.


Raffaele Bonanni, leader of the CISL trade union, said: “Monti told us that he has reached a deal with the main political forces.” But La Repubblica daily said Monti was “concerned his government may find itself without political sponsors and last only a few months.” The 68-year-old has said he wants his cabinet to stay on until 2013 — the scheduled date for Italy’s next elections.


Investors meanwhile piled the pressure on Monti with stocks in Milan closing down 1.08 percent and Italy’s borrowing costs breaking through a 7.0-percent threshold that has set off alarm bells around Europe and beyond.The European Union, which together with the International Monetary Fund is now auditing Italy under a newly-imposed monitoring mechanism, has warned the country may need to pass extra budget austerity measures.


It has however given early approval to Monti even before his nomination.


“What I hope now is that in Italy there will be a necessary political consensus,” European Commission head Jose Manuel Barroso said on Monday.


“If there is real consensus around this new government, I hope that confidence … of the investors will come back to Italy.”