Former Italian prime minister Silvio Berlusconi accused Italy's technocrat government of Mario Monti today of pursuing economic policies dictated by Germany that had dragged Italy into recession.
In remarks that point to a bitter election campaign fought over European issues, Mr Berlusconi said Germany had taken advantage of the financial crisis to lower its own borrowing costs at the expense of other states.
He said Mr Monti's government had been compliant in following a harmful austerity policies set by other European countries.
"The Monti government has followed the Germano-centric policies which Europe has tried to impose on other states and it has created a crisis situation which is much worse than where we were when we were in government," he told his own Canale 5 television.
European shares were lower for a second day today on the back of political turmoil in Italy.
The FTSEurofirst 300 was down 2.12 points, or 0.2 per cent, at 1,132.41.
Italian 10-year bond yield rose 4 basis points to 4.86 per cent at 9.25 am in Rome after jumping 29 basis points yesterday, the biggest gain since August. Goldman Sachs Group told clients to expect further gains in Italian risk premiums, while IHS Global Insight said political weakness may force Italy to request a bailout
Banks were again the worst performers on the index, although losses were more subdued in than the previous session, as investors took stock of the potential for political instability in the euro zone after Mr Monti announced he would step down after the 2013 budget was agreed.
Ian Williams, equity strategist at Peel Hunt noted that while yields rose on Italian bonds after Mr Monti's announcement, moves were not as steep as had been feared and contagion had failed to spread to other peripheral bond markets.
"If that is a sign that asset markets are growing less vulnerable to euro zone political machinations moving into 2013, it would be welcomed by the majority of investors," he said.
Belgian bank and insurance group KBC led fallers, down 6.7 per cent after it said late yesterday it had raised roughly €1.25 billion to shore up its balance sheet at the same time as paying back state aid to Belgium.
Agencies
