The economic and political crisis in Italy is deepening amid growing fears that the country will default on its debt.
Italian bond yields—the rate of interest it pays on government debt—rose to 6.71 percent on Tuesday of this week.
Economists say that rates of over 6 percent put countries in the “danger zone”.
Italy is the third biggest economy in the eurozone—far bigger than Greece. Its debts now run at 120 percent of GDP. The prospect of a bailout is becoming increasingly likely.
Italian prime minister Silvio Berlusconi is facing a huge political crisis.
After losing a routine motion in the lower house last month his majority has withered away.
He was set to rely on allies in the anti-immigrant Northern League to get the 2010 accounts voted through on Tuesday this week.
If he fails, he will be unable to force through the austerity measures he’s promised to the European Central Bank and the IMF. Stock markets perked up when rumours of Berlusconi’s resignation spread on Monday—but sank again when he denied the claim via his Facebook page.
The global elite no longer sees him as a credible leader, capable of Greek-style attacks on wages and living conditions.
And ordinary people are sick of the corruption, sleaze and falling living standards that Berlusconi’s right wing coalition has presided over.
Unions in Italy have held two general strikes in the last six months. On Tuesday a transport strike paralysed the capital.
And tens of thousands of people gathered in Rome last Saturday at an opposition rally against Berlusconi’s austerity plans. The unions say they are “ready” to fight the plans.
Whether Berlusconi stays or goes, it is the confidence of the working class to resist austerity that will be key.