Tradervox.com (Dublin) – Mario Monti’s pending resignation risks delaying the efforts of fighting the debt crisis in the region that has lasted for three years. The Italian prime minister who is expected to resign this week after parliament passes the budget. Euro region and business leaders have urged Monti to enter the Italian election campaign but the PM seems adamant and wants to quit after the budget is passed. Silvio Berlusconi, the Former Prime Minister, have withdrawn his support for the government. The upper house started the budget debate yesterday and it will be passed to the lower house later.
The European leaders have closed the year with some breathing room as the European Union summit held last week agreed to bolster the euro with fiscal rules aimed at helping the indebted nations. The EU summit passed rules on permanent bailout fund, European Central Bank bond buying program and issued a clear road map for tighter banking and fiscal union. The EU summit efforts were overshadowed this month by Berlusconi’s announcement that he was withdrawing support for the Monti’s government, pledging to return to power for the fourth time.
According to Erik Nielsen, the Chief global economist in London at UniCredit SPA, the outcome of the Italian election, which might be held in February 2013, will not derail last year’s reform process. However, he indicated that the process requires close monitoring for any signs of derailment.
The 17-nation currency climbed to the highest level since May against the greenback while the Spanish government bonds advanced for the third week as bets the situation is being contained increased. The agreement by the EU leaders last week to create a central bank supervisory body and the signing of the next aid tranche for Greece have led to the improved optimism. The challenges next year are expected to revolve around dealing with the Franco-German differences on how to develop closer fiscal ties.
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