Italy grapples with new Berlusconi crisis

Five cabinet ministers from former Italian PM Silvio Berlusconi's party have quit the government. Source: AAP

ITALY is mired in a fresh political quagmire after Silvio Berlusconi pushed his party's ministers to quit the fragile coalition government, a move Prime Minister Enrico Letta has called a "crazy act".

All five ministers from the People of Freedom (PDL) party on Saturday took the decision to step down at Berlusconi's urging, said deputy prime minister Angelino Alfano, the number two in government who was among the resignations.

Italy newspapers put the blame for the new government crisis squarely at the ex-prime minister's feet.

"The convict has made Italy fail," read the headline in the leftist daily Il Fatto Quotidiano, alluding to Berlusconi's conviction for tax fraud.

The centre-right La Stampa and business newspaper Il Sole 24 Ore decried "the madness" of the actions taken by the media mogul who has dominated Italian politics for most of the last two decades.

The flamboyant billionaire, who turns 77 on Sunday, dismissed as "unacceptable" a demand by Letta on Friday for parliament to express support for the government next week, in a bid to end a crisis that has plagued the bickering ruling coalition.

Now President Giorgio Napolitano will have to mediate to find a way out of the latest political impasse. He is expected to meet Letta on Sunday.

Letta's government was cobbled together following a two-month stand-off after an inconclusive general election in February.

The premier of the centre-left Democratic Party (PD) had won the confidence of financial markets by managing to keep together the improbable right-left coalition.

Italian media on Sunday speculated that if the crisis deepens there could be a reversal in market confidence, making it harder for Italy to deal with its economic difficulties and enact needed reforms.

The revolt among Berlusconi's backers boiled over on Thursday when they first threatened to resign over the former leader's legal problems.

A Senate committee was preparing to vote on whether to eject Berlusconi from the chamber after he was sentenced to a year in prison for tax fraud, a ruling that was upheld by Italy's top court in August.

Letta on Friday told a cabinet meeting tasked with approving key measures to rein in the recession-hit country's budget deficit that no further legislation would be enacted until the political crisis was resolved.

The cabinet had convened to determine how to delay a controversial planned rise in value-added tax, but the meeting ended in disarray amid the escalating tension over Berlusconi's conviction.

As a result, the VAT hike from 21 per cent to 22 per cent will go ahead, with effect from Tuesday, as economists worry that it will dampen consumption.

In encouraging the PDL ministers to resign, Berlusconi said they should not be "complicit in the latest vexation imposed on Italians by the left".

Letta retorted: "To try to justify his crazy and irresponsible act, aimed fully at protecting his personal interests, Berlusconi is... using the VAT as an alibi."

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