UK Applauds Italy's Austerity Measures as Silvio Resigns; ECONOMIST MONTI TO FORM NEW GOVERNMENT

Article excerpt

Byline: JOE CHURCHER

THE approval of austerity measures by the Italian parliament - sparking the resignation of Silvio Berlusconi - was hailed by the UK Treasury as a "welcome step" towards resolving the eurozone debt crisis.

Mr Berlusconi stepped down as Italy's prime minister on Saturday night once the package was rushed through to make way for a technocratic interim administration as Rome seeks to ease away from the economic brink and calm volatile markets.

Although MPs had risen to applaud him as he left the chamber of deputies following the vote, his route to the presidential palace to tender his resignation was lined by hecklers rejoicing at his departure.

Last night, Italy's president asked economist Mario Monti to form a new government.

Party leaders gave their approval for economist Mr Monti to try to form a government, but said it can only last just long enough to implement measures to save Italy from financial disaster.

A UK Treasury spokeswoman said in response to the developments: "As the Chancellor has said, the crisis in the eurozone is a danger to all economies, including ours."

"The parliamentary vote in Italy is a welcome step."

Prime Minister David Cameron has warned of difficulties for the UK as a direct result of the "big question mark" over the eurozone, declining to rule out a return to recession.

The Prime Minister is expected to travel to Berlin for talks with German Chancellor Angela Merkel who is under increasing pressure to approve European Central Bank intervention. But he came under renewed attack from Labour yesterday, with Shadow Chancellor Ed Balls renewing accusations that ministers are using the crisis as a cover for failing to stimulate growth and jobs in the UK.

Labour is calling for tax breaks for small business, a temporary VAT cut and a bank bonus tax to fund jobs for young people as part of a five-point plan which it will next week send shadow ministers around the country to promote.

The campaign will kick off on Wednesday when the Commons begins a short break - meaning Mr Cameron will not face his weekly question time session on the day the latest unemployment figures are released. Writing on his blog, Mr Balls said: "Britain faces an economic emergency, but out-of-touch ministers are just sitting on their hands and blaming everybody but themselves.

"David Cameron might be glad there won't be Prime Minister's Questions on the day of the unemployment figures, but we will not let this Government off the hook. …