“Italy’s image has improved markedly thanks to the Monti government, and all that could be reversed,” Riccardo Barbieri, chief European economist at Mizuho International Plc in London, said in a research report today. Berlusconi “has repeatedly argued that the pros and cons of leaving the euro must be better analyzed and considered.”
Berlusconi’s candidacy was criticized by European Parliament President Martin Schulz, who told news agency Ansa yesterday that the former Italian premier placed himself as a priority ahead of his country. A spokesman for Schulz confirmed the remarks, which renewed a dispute between the two leaders. In 2003, Berlusconi likened Schulz, then a German member of the European Parliament, to a Nazi concentration camp guard.
At a summit in Brussels on Dec. 13-14, EU heads of government will debate a road map for the overhaul of the euro area, including increased powers to intervene in national budgets and the establishment of a single banking supervisor. Finance ministers will meet first, on Dec. 12.
Finding consensus in the EU may become more difficult without Monti, who overcame German resistance at a summit in June to broker a common pledge to aid members in financial distress. Berlusconi, who was pushed from power last year after proving unable to protect Italy from the debt crisis, announced Dec. 8 he will seek the premiership in next year’s election and criticized Monti for running a “German-centric” program.
“The 2013 Italian election remains high on our list of tail risks,” Holger Schmieding, chief economist at Berenberg Bank AG in London, wrote in a note yesterday. “A Berlusconi campaign against ‘German austerity’ could potentially unsettle markets.”
Italy’s economy shrank 0.2 percent in the three months ended Sept. 30, the fifth consecutive quarterly decline. The economy contracted 2.4 percent on an annual basis and household spending fell 4.8 percent from a year earlier.