Rome, October 1 (RHC)-- Italy’s political crisis has affected the country’s economy as Rome continues to grapple with a lingering recession. On Monday, Italy's blue chip index, FTSE MIB, slumped more than two percent.
The political crisis also caused the 10-year yield on the market for the government bonds to jump to 4.65 percent on the same day. The crisis engulfing Italian Prime Minister Enrico Letta’s coalition government is mainly triggered by former Italian Prime Minister Silvio Berlusconi’s center-right People of Freedom (PDL) party.
Over the weekend, all Italian ministers from Berlusconi's party resigned en masse in protest to the government’s order to increase sales tax. At the same time, Italian President Giorgio Napolitano pointed out that he did not want new polls in the country.
Inconclusive results in February's election had forced the center-left Democratic Party and PDL into a coalition. Opinion polls suggest that the two traditionally rival parties have roughly equal support among Italian voters.
Napolitano and business leaders have warned that any new election would probably produce another stalemate in Italy as the country is still mired in recession. Italy struggles to manage a two-year-long recession, a two-trillion-Euro (USD 2.7-trillion) public debt as well as a youth unemployment rate of around 40 percent.
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