Italy’s outgoing PM Mario Monti sought to give reassurances that any government emerging from the upcoming elections would be “very responsible,” as Italian stocks plunged and borrowing continued to rise after his resignation announcement.
Speaking in Oslo, where he attended the Nobel prize ceremony for the European Union, Monti said he was “very confident that the Italian elections when they come will give room to whatever coalition or government that will be in my view a highly responsible EU-oriented government which will be in line with the huge efforts already pursued by Italy in terms of structural reform.”
The Milan stock exchange suffered Europe’s biggest losses after the resignation announcement on Saturday, closing down 2.2 percent on Monday. Italy’s 10-year bonds alos lost 40 basis points compared to German ones, considered as safe haven by investors.
Monti has managed to restore Italy’s reputation and pushed for labour market reforms, but with Italy’s public debt at a crushing 120 percent of GDP, high unemployment and low productivity, Italy could anytime become the next eurozone disaster area.
By linking his resignation to the adoption of next year’s budget, Monti is seeking to pass one last important piece of economic policy before stepping down and having early elections, most likely in February.
So far, the 69-year-old economist and former EU commissioner has not said whether he will run in the elections.
“I am not considering this particular issue at this stage,” Monti said.
“All my efforts are being devoted to the completion of the remaining time of the current government, which appears to be a rather short time, but still requires intensive application of mind and energies for my part as well as my colleagues,” he added.
Meanwhile, Pierluigi Bersani, the leader of the centre-left Democratic Party tipped in polls to win the elections, said Monti should not join any party and should preserve his technocrat credentials.
“Precisely because Monti should still be able to be of service to this country, it would be better for him to stay out of the contest,” Bersani said.
The political turmoil in Italy was stirred up by Monti’s predecessor Silvio Berlusconi, who had stepped down last year amid pressure from EU peers and from markets pushing the country closer to a bailout.
Berlusconi’s party last week withdrew its support to Monti’s government and the 76-year-old media magnate and convicted fraudster announced he would stand again for elections.
EU leaders have all rallied behind Monti.
EU Council chief Herman Van Rompuy, also in Oslo on Monday, said that Monti not only “did a great job” as PM, but by restoring confidence in Italy, “was extremely helpful also in keeping stability in the eurozone.”
German Chancellor Angela Merkel held a private meeting with Monti while in Oslo. Her foreign minister Guido Westerwelle told journalists that it was essential for Italy to continue on the path started by Monti.
“Italy can’t stall at two-thirds of the reform process. That wouldn’t cause turbulence for just Italy, but also for Europe,” Westerwelle said.