ROME — Italy became the latest target in Europe’s financial crisis Monday as soaring borrowing rates intensified pressure on Premier Silvio Berlusconi to resign and let a new government reform the country’s spendthrift ways.
Berlusconi batted away reports that he was considering stepping down in favor of early elections, saying they were “without foundation.” But the prospect of financial disaster was real because of Italy’s huge debts and slow growth. Unlike Greece, Ireland and Portugal — the three countries that Europe has already bailed out — Italy’s economy could be too large to rescue.
Investors want the government to quickly pass measures to boost growth and cut debt. But defections from Berlusconi’s coalition government mean he no longer commands enough loyalty to pass the reforms.
Increasingly, Berlusconi is himself being seen as the problem. If Berlusconi should resign or lose a confidence vote, President Giorgio Napolitano would decide whether to call early elections or name a government of technocrats rather than politicians.
Meanwhile, Greece can get a crucial $11 billion slice of bailout money this month if the leaders of the two main parties commit in writing to the terms of the country’s two massive bailouts and the austerity measures and economic reforms that they require, eurozone finance chiefs said Monday.
That payment, which has been delayed by two months, would head off a potentially disastrous default as early as December.
