Berlusconi Quits To Avert Economic Disaster

Italy is about to appoint a new prime minister after Silvio Berlusconi stepped down from the post in a move designed to help rescue the eurozone from crisis.

Giorgio Napolitano is to hold consultations will each of Italy's main political factions, with former European commissioner Mario Monti likely to be asked to form a new government to implement tough economic measures.

Ten-minute meetings are scheduled throughout the morning and a new administration could be in place in time to reassure the markets when they open on Monday.

The end of Mr Berlusconi's 17-year political career, which included three stints as premier, sparked celebrations late into the night in Rome.

Outside the president's office, where the prime minister handed in his resignation, several dozen singers and classical musicians performed Handel's Alleluia.

Others uncorked bottles of sparking wine and danced while jeering Mr Berlusconi as a "buffoon".

The 75-year-old billionaire had survived numerous sex scandals and corruption allegations but his grip on power was finally ended after he lost his parliamentary majority amid a mounting debt crisis.

Italy's debts stand at 1.9trn euros (£1.6trn), or 120% of its economic output.

It will have to roll over a little more than 300bn euros (£2.57bn) of its debts next year alone.

Mr Berlusconi stepped down after the Chamber of Deputies approved economic reforms demanded by the European Union and Mr Napolitano signed them into law

The measures include a rise in VAT from 20% to 21%, an increase in the retirement age and widespread job cuts.

When Mr Monti was suggested as a possible candidate on Friday it had a positive impact with the markets, as the yield on benchmark Italian 10-year bonds fell to 6.48%, below the crisis level of 7% reached earlier in the week.

Greece, Ireland and Portugal all required international bailouts after their own borrowing rates passed 7%.

The head of the International Monetary Fund, Christine Lagarde, said on Saturday that the political transition over the next few days should send a "clear sign of clarification and of credibility" that the country is now on the right path to get its finances back in order.

Speaking to reporters in Tokyo, she praised Mr Monti, saying she had great esteem for the "quality" economist with whom she had long enjoyed a "extremely warm" and effective relationship.