ROME — Under pressure to control its dangerous debt, Italy sped a package of reforms toward approval Friday and prepared to hand its dysfunctional government over to a technocrat who Europe hopes can save the country from going broke.
Financial markets around the world rallied in relief. The Dow Jones industrial average in New York rose 2 percent, and markets in Britain, France and Germany posted similar gains.
A set of austerity measures cleared the Italian Senate by a vote of 156-12. The lower chamber of Parliament will vote today, and Prime Minister Silvio Berlusconi has said he will step down once the reforms pass.
In a sign of confidence from investors, Italy’s borrowing costs fell sharply. The yield on benchmark Italian 10-year bonds fell to 6.48 percent, safely below the crisis level of 7 percent reached earlier this week.
Greece, Ireland and Portugal all required international bailouts after their own borrowing rates passed 7 percent. The Italian economy would not be so easy to save. It totals $2 trillion, twice as much as the other three countries combined.
An Italian default could tear apart the coalition of 17 countries that use the euro and deal a strong blow to European and U.S. efforts to avoid recessions.
The Senate chamber resounded with applause for Mario Monti, the distinguished economist expected to succeed Berlusconi. He was unexpectedly named senator-for-life this week, putting him in line to lead.
The austerity measures will be not enough to revive Italy’s economy. They raise the retirement age to 67, but not until 2026, and call for selling state property, but they contain no labor reforms.
