Brief respite as Berlusconi wins confidence vote

ITALIAN Prime Minister Silvio Berlusconi overcame coalition infighting to win a vote of confidence, his first parliamentary test since suffering two stinging electoral losses.

Berlusconi’s centre-right government won the lower house vote on measures to boost growth by a margin of 24 votes, thanks to its Northern League ally that is reluctantly supporting him after defeat in referendums and local polls over the past month.

The motion passed with 317 deputies voting in favour and 293 against. Two lawmakers abstained.

The victory is likely to provide only brief respite for Berlusconi.

Analysts warn Italy could pay a heavy price for failing to push through reforms and ratings agencies Standard & Poor’s and Moody’s both lowered their outlook on Italy over the past month, citing doubts about its ability to cut huge public debt.

“The window of opportunity for the government to set the pace of the policy agenda is closing,” Barclays Capital analysts said. “Markets are likely to demand higher spreads unless Italy switches gears soon.”

Berlusconi is also battling to keep his coalition together, with an increasingly frustrated League demanding tax cuts and an end to Italy’s costly mission in Libya.

Asked if Berlusconi would see out the end of his term in 2013, the League’s mercurial leader Umberto Bossi said: “If he does the right things, yes. We’ve already given Berlusconi a timeline.”

A separate vote in the lower house to verify whether the government enjoys a majority may be called today.

Berlusconi faces a bigger test in coming weeks when he must push through austerity measures totalling about €40 billion to eliminate the budget deficit by 2014 — a task made even more arduous by the League’s demand to cut taxes.

In a reminder of the price of inaction, Moody’s said last week that it may cut Italy’s rating over concerns about its ability to bring down a public debt mountain equivalent to about 120% of grossdomestic product.