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Italy

Index

Italy Main Page
Italy Becomes a Unified Peninsula
The Rise and Fall of Mussolini
Italy Moves to Stabilize Its Economy
Berlusconi Proves to Be Resilient and Persistent
Italy Faces Challenges and Berlusconi Faces Charges
Mario Monti Helps to Stabilize Economy

Mario Monti Helps to Stabilize Economy

Parliament passed a 54 billion euro ($74 billion) austerity package in September, which sparked protests and a confidence vote on Berlsuconi in parliament that he narrowly won. With no sign that Italy's debt crisis was abating and its economy too big for a bail out, the European Union demanded another round of austerity measures in November. By this point—and with interest rate topping 7%, neither the public nor Berlusconi's allies in parliament had much faith in his leadership. The dissonance was demonstrated when members of his coalition in the lower house of parliament defected in a vote on the budget. Berlusconi, who had somehow managed to weather political and personal scandals that would have ended most political careers, confronted a crisis too big even for him. He promised to resign once the measures passed parliament. Italy's Senate passed the plan on November 11, 2011, and Berlusconi stepped down on November 12. Mario Monti, an economist and former antitrust commissioner for the European Commission, took over, leading a cabinet of technocrats to implement the austerity plan.

In his first six weeks in office, Monti pushed through a series of reform measures that raised the retirement age, increased property taxes, overhauled government agencies, and cracked down on tax cheats. His reforms helped to stabilize the foundering economy and restore investor confidence. However, he was criticized for focusing too much on austerity rather than growth. Monti resigned in December 2012 after losing the support of Berlusconi's People of Freedom (PdL) party.

Parliamentary elections held in February 2013 were inconclusive, leaving the country in political gridlock. The center-left Democratic Party (PD), led by Pier Luigi Bersani, narrowly prevailed over Berlusconi's center-right People of Liberty party in the lower house, 29.5% to 29.2%. The Democratic Party, however, did not secure a majority in the Senate, and thus could not form a government. In a stunning turn, the Five Star Movement, the protest party headed by comedian Beppe Grillo, won 25% of the vote, placing third. Monti's party placed last. Bersani resigned as leader of the PD after he failed to form a coalition government and amid infighting within the party. Enrico Letta took over as head of the party. Stock markets in the EU tumbled amid the uncertainty over the future of Europe's third largest economy.

As the gridlock wore on into April, Napolitano agreed to run for re-election, and Parliament elected him to an unprecedented second term. He tasked Letta with forming a government. Letta, who at 46 is one of the country's youngest prime ministers, has served in three center-left governments. By the end of April, he had assembled a cabinet composed of ministers from both his center-left Democratic Party and Silvio Berlusconi’s center-right People of Liberty party, as well as a record number of women. In addition to some political veterans, he named several younger ministers, likely responding to February's election that produced a large anti-establishment vote.

See also Encyclopedia: Italy .
U.S. State Dept. Country Notes: Italy
National Statistical Institute www.istat.it .