Berlusconi's reshuffle

The reshuffle carried out on Saturday by Italian prime minister Silvio Berlusconi could hardly be labelled sweeping

The reshuffle carried out on Saturday by Italian prime minister Silvio Berlusconi could hardly be labelled sweeping. Mr Berlusconi himself warned that the changes to his government would be minor and he has been true to his word.

His party, however, and the other parties in his coalition may be concerned that he lost an opportunity to freshen up the face of a government which is falling in the opinion polls and which must go to the country by May of next year.

Mr Berlusconi will be disappointed that he had to resign and present a new government to parliament. His administration has already secured its place in Italian history by being the longest-serving since 1957. Had he not been forced into a reshuffle, his government could have been the first Italian administration since the war to serve a full term undefeated.

The record books may also note, however, that the economy has not prospered under the guidance of the multi-millionaire media magnate. It was confidence that Mr Berlusconi would put some fizz into the economy - as well as his promise to lower taxes - that saw his coalition elected four years ago with the largest majority of any government since the war. Instead, industrial production is in the doldrums, having contracted for the last three quarters in succession. The budget deficit is running at 3.6 per cent, a level which the EU has already censured, and is forecast to hit 4.6 per cent next year.

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The faltering economy, added to the government's supply of troops to the US-led forces in Iraq, served up a pasting for the coalition in regional elections earlier this month; of the 14 regions, the coalition lost in 12. The setback manifested serious tensions within the coalition. The Northern League party wants more decentralisation and, to put it bluntly, as little to do with the economically-poorer south of the country as possible. But both the National Alliance and the Union of Christian Democrats look to the south for support and want it to benefit through economic aid from now until the election.

Mr Berlusconi needs to walk a fine line with such conflicting ambitions and the Northern League has made it clear that he still must deliver a constitutional reform bill which would give more self-rule to northern Italy. His coalition is behind in the polls.

The temptation for him is to deliver on the €12 billion worth of tax cuts that he promised, regardless of what it will do to the deficit. It would be a "live now, pay later" ploy which may go down well with the voters. But it would run the risk of greatly diminishing the government's finances without delivering a worthwhile boost to the economy.