The euro rallied against the dollar this evening as Italian prime minister Silvio Berlusconi seemingly agreed to step down in the next two weeks. There were reports on Monday that Berlusconi had accepted it was time to go, but on Tuesday morning the markets were jittery at the prospect that he might try to stay. It seems he has now accepted the inevitable.
The plan for Berlusconi’s departure was outlined to the media by Italy’s president, Giorgio Napolitano, who says that Berlusconi plans to see a new set of austerity measures through parliament by mid-November and then quit. It’s not clear who might take his place, but observers believe that even for Berlusconi, the undisputed ‘comeback kid’ of European politics, this latest move signals the end of his political career.
Italy is widely seen as a serious economic problem for Europe, with genuine concern that the Italian economy could collapse and drag down not only the Europe but also the wider program of European integration. Berlusconi’s decision to resign will ease those concerns, but will not eradicate them altogether.