Italy | Mario Monti Helps to Stabilize Economy
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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, 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. Stock markets in the EU tumbled amid the uncertainty over the future of Europe's third largest economy.