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Last Updated: Sunday, 4 July, 2004, 14:18 GMT 15:18 UK
Monti 'to save Italian coalition'
Mario Monti
The Italian press have backed Monti as next finance minister
EU Competition Commissioner Mario Monti is tipped to step in to replace Italian economy minister Guilio Tremonti, who has resigned from the government.

Prime Minister Silvio Berlusconi is hoping Mr Monti's presence will calm the growing crisis within the coalition

Economy Minister, Giulio Tremonti, quit hours before key cabinet talks over a controversial emergency budget.

The four-party cabinet was due to discuss drastic spending cuts to bring Italy in line with EU limits.

Prior to Mr Tremonti's resignation, Gianfranco Fini, the deputy prime minister and head of the National Alliance party, had been threatening to quit because of economic policy.

The EU has demanded Italy take radical measures to bring its soaring budget deficit to within 3% of gross domestic product (GDP).

The deficit is currently forecast at 3.2% of GDP.

Mr Berlusconi is due to come under fresh pressure to rein in the budget deficit at a meeting of EU finance ministers in Brussels on Monday.

Parmalat scandal

The cabinet was set to have agreed spending cuts of 5.5bn euros ($7bn) but this would not be enough to please Brussels, says the BBC's Rome correspondent, David Willey.

He says Mr Berlusconi is running out of room for manoeuvre, having promised tax cuts to appease an electorate that voted heavily against his party in recent polls.

Mr Tremonti resigned after a meeting with coalition partners.

He has frequently clashed with Mr Fini, who has been threatening to withdraw his National Alliance from the government if it is not granted a bigger say in economic policy.

The National Alliance is the second-biggest party in the coalition.

Mr Tremonti was in office when a financial scandal hit Italian food giant Parmalat, prompting him to push for curbs on the national bank's powers.

The BBC's Frances Kennedy
"The smaller parties are demanding a greater say"

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10 May 04  |  Europe
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06 Jul 03  |  Business

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