Berlusconi vows to work on economy
Italian Premier Silvio Berlusconi has vowed to complete his five-year term and focus his government policies on growth to calm the market turmoil that threatens to plunge one of Europe's biggest economies into the debt crisis.
After a volatile day on markets, in which Italian borrowing rates touched a record high, Berlusconi told parliament that Italy "has not done little" in response to the crisis. He said: "But we know there is more to do."
Addressing the lower house of parliament in Rome after financial markets had closed for the day, he said Italy needs to promote competitiveness and growth. He said: "Our duty as the government is to work for the good of Italy, making the economy take off."
Berlusconi said the 70 billion euro (£61 billion) in austerity measures passed last month will balance the budget by 2014, and emphasised that nine billion euro (£7.8 billion) infrastructure projects- mostly in the poorer south - approved earlier on Wednesday will help promote growth.
He stressed that Italian banks remained solid and that investors who were pushing up Italy's borrowing rates did not recognise the country's fundamental strengths: a stable banking system, low levels of private sector indebtedness - half that of the United States and Britain - and a strong entrepreneurial spirit.
"I am speaking to you as an entrepreneur with three companies listed on the stock exchange," Berlusconi said, to boos from the opposition benches.
Growing market jitters have intensified opposition calls for Berlusconi's resignation, with centre-left leaders claiming there was a lack of international confidence in the Italian leader. But Berlusconi was firm in saying that he will stay in office until his mandate expires in 2013.
Italy's 10-year borrowing rate briefly spiked to 6.21% before easing to 6.06%.
Spain was also under the market spotlight, forcing prime minister Jose Luis Rodriguez Zapatero to delay his holiday by two days. Its 10-year borrowing rate edged down to 6.23% from Tuesday's euro-era high of 6.45%. Both countries' yields have soared in recent days, suggesting investors are worried they may eventually need help with their debt.
The revival of the debt crisis is mainly due to a global sell-off by traders of any investments that appear risky - such as the bonds of Italy and Spain - after indicators suggested the US economy is slowing sharply