Italian PM wins confidence vote after Berlusconi U-turn

ROME - Agence France-Presse

Italian center-right leader Silvio Berlusconi looks on at the Senate in Rome, October 2, 2013. REUTERS/Tony Gentile

Italian Prime Minister Enrico Letta won a confidence vote with a crushing majority after his challenger Silvio Berlusconi abandoned his bid to topple the government in a stunning about-turn.

Out of 305 senators who took part in the vote, 235 were in favour of the government and 70 against with no abstentions -- far higher than the majority required of 153 senators.

Berlusconi drops bid to topple government

Italy's Silvio Berlusconi on Wednesday abandoned his bid to topple Letta, saying he would vote to support the government in a humiliating climbdown after key allies rebelled.

"We have decided to vote for confidence, not without internal disputes," Berlusconi said ahead of a confidence vote in parliament called after he launched his challenge to the leadership on Saturday.

Berlusconi said he had changed his mind on Wednesday after hearing Letta's promise to lower taxes and "the need for a government that can carry out institutional reforms in Italy".

The surprise about-turn made victory for Letta's coalition a certainty and was immediately cheered by the markets, with shares in Milan jumping 1.45 percent higher after the shock announcement.

The difference between rates on Italian 10-year government bonds and benchmark German ones -- a measure of investor confidence -- also narrowed to 253 basis points from 260 points on Tuesday. Letta shook his head as Berlusconi was speaking and the address was followed by stunned silence.
 
"Italians are crying out that they cannot take any more blood in the arena, with politicians who slit each other's throats and then nothing changes," said Letta, a 47-year-old moderate leftist.
 
Berlusconi had only on Tuesday rallied his supporters to vote against the government.
 
"Despite the risks, I have decided to put an end to the Letta government," Berlusconi had said in a letter to the Catholic magazine Tempi.

Tax fraud against Berlusconi
 
Tensions within the coalition have spiked since Italy's top court upheld a tax fraud conviction against Berlusconi in August, which could see him ejected from the Senate later this month and barred from taking part in the next elections.

The country is suffering the longest downturn since the Second World War and is struggling to meet a public deficit target of 2.9 percent for this year -- below the EU-mandated 3.0 percent.
 
The jobless rate has also returned to a record high of 12.2 percent, with youth unemployment also at its highest ever level of 40.1 percent.