Europe

Italy crisis: Berlusconi will resign 'within days'

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Media captionItaly's cost of borrowing touches a new record, a day after Prime Minister Silvio Berlusconi said he would resign

Italian PM Silvio Berlusconi will step down "within a few days", the country's president has said.

Giorgio Napolitano said he wished to "dispel any doubt or misunderstanding" on when the prime minister would fulfil his promise to resign.

He also said there would be no delay in passing economic reforms demanded by Italy's eurozone partners.

His comments came after the country's financial crisis deepened, with government bond yields rising to 7%.

That rate is widely regarded as unsustainable.

Mr Berlusconi announced his decision to step down on Tuesday after appearing to lose a parliamentary majority in a budget vote, and amid mounting concern that Italy could be the next victim of the eurozone debt crisis.

'Short time'

Mr Napolitano said a financial stability law incorporating reforms would be approved within days, after which he would hold consultations to end the crisis.

"Within a short time either a new government will be formed... or parliament will be dissolved to immediately begin an electoral campaign," Mr Napolitano said, according to Reuters news agency.

He said Italy would not endure "a prolonged period of political and parliamentary inactivity".

Italian media have quoted sources as saying final approval of the reforms could come as early as Saturday, AFP reports.

The president also nominated the former European Commissioner, Mario Monti, as senator for life.

The move led some to speculate he was paving the way for Mr Monti's possible appointment as interim prime minister.

BBC Europe editor Gavin Hewitt, in Rome, says political difficulties clearly lie ahead.

And even if the present crisis ebbs, the fundamental problems remain - a country of anaemic growth and a debt mountain of 1.9tn euros (£1.63tn; $2.6tn), our correspondent adds.

Earlier, Mr Berlusconi said: "I will resign as soon as the law is passed... I see elections being held at the beginning of February and I will not be a candidate in them."

The yield on benchmark 10-year Italian bonds rose past 7% despite Mr Berlusconi's statement, which has heightened concern over whether Italy can service its debts.

It is the highest rate since the euro was founded in 1999. In comparison, Germany's implied cost of borrowing for 10 years is 1.73%.

Meanwhile, an EU team was in Rome on Wednesday to begin monitoring how Italy plans to cut its soaring debt burden.

Economic Affairs Commissioner Olli Rehn said he would present the findings at the end of November, calling the situation in Italy "very worrisome".