Image: Silvio Berlusconi, Umberto Bossi
Andrew Medichini  /  AP
Italian Premier Silvio Berlusconi, left, holds the hand of Reforms Minister Umberto Bossi during a voting session at the Lower Chamber, in Rome, Tuesday, Nov. 8.
msnbc.com news services
updated 11/8/2011 7:15:07 PM ET 2011-11-09T00:15:07

Italian Premier Silvio Berlusconi promised Tuesday to resign after parliament passes economic reforms demanded by the European Union, capping a two-decade political career that has ended with Italy on the brink of being swept into Europe's debt crisis.

Italian President Giorgio Napolitano met for about an hour with Berlusconi after the premier lost his parliamentary majority during a routine vote earlier Tuesday. In a statement, Napolitano's office said Berlusconi had promised during the meeting to resign once the economic reforms have passed parliament.

A vote on the measures is planned for next week.

In the earlier Tuesday budget vote, Berlusconi did get enough support to pass it, but the result laid bare his lack of support in parliament as financial pressure from the eurozone debt crisis pummeled Italy.

The vote won 308 votes of approval and no votes against in the Chamber of Deputies. But 321 deputies abstained from voting, most of them from the center-left opposition. If all 630 lawmakers had voted, Berlusconi would need a 316-seat majority to assure he was still in command.

Analysts said Italy was reaching the point where Portugal, Greece and Ireland had been forced to seek a bailout. Yields on Italy's 10-year benchmark bonds rose to 6.74 percent on Tuesday before dropping back.

Finnish Prime Minister Jyrki Katainen said Italy was just too big to bail out. "It is difficult to see that we in Europe would have resources to take a country of the size of Italy into the bailout program," he told parliament in Helsinki.

Doubts on leadership
Earlier on Tuesday, Berlusconi's top ally called on him to "step aside" as uncertainty rocked the markets.

Italian news reports quoted Umberto Bossi from the Northern League as telling reporters that it's time for Berlusconi to resign and be replaced by another party leader from their coalition.  Berlusconi has been resisting calls to resign for weeks.

It may not be sex that dooms Berlusconi

Bossi has in the past expressed doubts on Berlusconi's ability to complete the current mandate. The Northern League as a whole has proven at times to be a difficult ally, exerting a strong independent streak and challenging Berlusconi on key policies.

The calls for Berlusconi to quit came as the country's borrowing rates spiked to their highest level since the euro was established in 1999.

The markets have turned their attention this week from the political crisis in Greece — where the two main parties were locked in talks Tuesday to forge a national unity government — to Rome.

If Rome burns, US will feel the heat

Berlusconi's government is under intense pressure to enact quick reforms to shore up Italy's defenses against Europe's raging debt crisis.

However, a weak coalition and doubts over Berlusconi's ability to push through austerity and reforms have heightened the unease in financial markets that Italy could need financial aid.

What happens in Italy is a particular worry as it's the eurozone's third-largest economy.

At around euro1.9 trillion ($2.6 trillion), Italy's debts are considered by many in the markets as being too big for Europe to bail out, making the country a bigger risk for investors and pushing up interest rates.

Higher rates would make it more difficult for Italy to rollover its debts and would mean they consume more and more of national income.

The Associated Press and Reuters contributed to this report.

Video: Italy’s Berlusconi says he’ll resign

  1. Transcript of: Italy’s Berlusconi says he’ll resign

    BRIAN WILLIAMS, anchor: Big news from Europe tonight and it will be felt here. Silvio Berlusconi , longtime prime minister of Italy , says he will step down shortly as Italy follows Greece in reacting to massive financial pressures. Our chief foreign correspondent Richard Engel began his reporting from there for last night's broadcast of "Rock Center," and he watched it all unfold there today. Richard , good evening.

    RICHARD ENGEL reporting: Good evening, Brian . It is with a degree of irony Italians say that Silvio Berlusconi is being brought down not by his numerous and well-known sexual scandals. This is a man who while in office was accused of having sex with an underaged prostitute and who by his own count has been in court more than 2,500 times. But in the end, it is the economy that is bringing down Mr. Berlusconi . Berlusconi , after all, is a billionaire, and Italians thought he would be good at managing the economy. Instead, Italy is drowning in debt. Berlusconi said today, after his coalition collapsed, that he would resign as soon as the government here passes a series of economic reforms. That could take place as early as next week. That is, Brian , if Mr. Berlusconi is keeping his word.

    WILLIAMS: All right. Richard Engel in Rome for us tonight. Richard , thanks.

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