ROME — Italy's borrowing rates spiked to a euro-era high on Monday, piling pressure on Premier Silvio Berlusconi to resign and make way for a new government that could more forcefully push through desperately-needed economic measures.
Italy is the new focus of the eurozone debt crisis, as its debts are huge, growth is slow, and the country would be too expensive to bail out. Investors want the government to urgently pass measures to boost growth and cut debt, but Berlusconi's majority is weakening by the day.
The yield on the country's ten-year bonds jumped another 0.33 of a percentage point on Monday to 6.58 percent, its highest level since the euro was established in 1999 and closer to the 7 percent threshold that has seen Ireland and Portugal accept bailouts.
There is growing concern that Berlusconi is the problem because he no longer commands enough loyalty among lawmakers to ensure the quick passage that European and international financial officials say Rome must achieve to avoid falling victim to a dramatic debt crisis like that bringing Greece to its knees.
The government has suffered defections from his coalition and the possibility of early elections is growing.
Public administration minister Renato Brunetta, a Berlusconi loyalist, acknowledged in a TV appearance Monday that the government has a "numbers problem" in parliament and if a majority is lacking then "everybody goes home and one votes."
Interior Minister Roberto Maroni agreed, adding "it is useless to persist."
But Berlusconi has remained defiant, insisting Sunday he still commands enough support in Parliament to enact urgently needed measures to save Italy from financial disaster.
"We maintain that there are no alternatives to our government until 2013," when elections are due, Berlusconi said, addressing a political gathering by audio hookup.
This week brings the first in a string of votes in Parliament on reforms and other stopgap measures to lower Italy's debt — now at 120 percent of GDP — and revive the dormant economy, the eurozone's third-largest.
During an economic summit in France last week, Berlusconi asked the International Monetary Fund to monitor the country's reform efforts, a humiliating step for such a large economy.Comment on this story
The leader of Italy's largest labor confederation is predicting 2012 will be a "terrifying" year for the economy even if beleaguered Premier Silvio Berlusconi leaves power soon.
CGIL leader Susanna Camusso in an interview with The Associated Press Monday also slammed Berlusconi's anti-crisis plan as containing virtually nothing to spark economic growth.
If Berlusconi's forces lose upcoming votes in parliament, the Italian president, who has repeatedly called on Berlusconi to take decisive steps immediately to rescue the nation, could intervene and rule that it is time for a new government. But only the loss of a confidence vote can force a government to resign.