Italy's Berlusconi wins vote on stimulus

Italian Prime Minister Silvio Berlusconi smiles during the vote in Rome, 21 June Image copyright Reuters
Image caption Silvio Berlusconi was smiling in parliament on Tuesday

Italian Prime Minister Silvio Berlusconi has easily won a parliamentary vote widely seen as a test of the stability of his coalition.

Measures to stimulate economic growth were backed by a margin of 24 votes, suggesting the coalition can win a formal confidence vote on Wednesday.

Its popularity has been declining amid weak economic recovery and scandals linked to Mr Berlusconi's private life.

It suffered setbacks in recent local elections and a popular referendum.

However, on Tuesday, the government won a motion of confidence in its economic stimulus measures in the Chamber of Deputies, Italy's lower house, by 317 votes to 293, with two abstentions.

Mr Berlusconi was due to appear later before the Senate, Italy's upper house, to outline his government's programme for the remaining two years of its term.

The programme is said to include concessions to the Northern League, the key partner for Mr Berlusconi's Freedom Party in the coalition.

The prime minister is also set to address the Chamber of Deputies on Wednesday before, as expected, it votes on a second motion, this time on confidence in the ability of the coalition to function.

Debt challenge

"These are the numbers of an absolute majority," said Angelino Alfano, justice minister and newly appointed secretary of the Freedom Party.

"We are satisfied with the umpteenth indication of our consistency that shows our strength."

Image copyright AFP
Image caption Mr Berlusconi's success rides on Northern League leader Umberto Bossi

Asked if Mr Berlusconi would see out the end of his term in 2013, Northern League leader Umberto Bossi said: "If he does the right things, yes."

The party is pushing for tax cuts, and for an end to Italy's involvement in Libya, on grounds of cost.

Finance Minister Giulio Tremonti has been resisting tax cuts, saying the state cannot afford to lose revenue.

Analysts warn that Italy could pay a heavy price for failing to push through reforms aimed at cutting the country's huge public debt.

"The window of opportunity for the government to set the pace of the policy agenda is closing," Barclays Capital analysts said in a note, quoted by Reuters news agency.

"Markets are likely to demand higher spreads unless Italy switches gears soon."

The analysts said they did not expect the Northern League to trigger a political crisis in the short term but it was a "possibility which cannot be entirely ruled out".

Amid a series of corruption cases and an under-age sex scandal, Mr Berlusconi has seen his poll ratings fall, with a recent survey by PR suggesting his support among voters now stands at a record low of 29%.

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