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UPDATE 2-Italian government confidence vote over budget will test post-Berlusconi strength

Giuseppe Fonte
Monday, 25 Nov 2013 | 9:29 AM ET

post-Berlusconi strength@

* Letta government almost certain to survive

* Berlusconi has threatened to move into opposition

* Rising tension ahead of vote to expel Berlusconi from parliament

ROME, Nov 25 (Reuters) - Italian Prime Minister Enrico Letta's coalition government said on Monday it would call a confidence vote on its 2014 budget, a move that will give the first clear proof of its strength since Silvio Berlusconi's party split this month.

Confidence votes, which limit the scope for time-consuming amendments, are regularly called to speed legislation in Italy and Letta is almost certain to win with the backing of rebels who split off from Berlusconi's centre-right party, now rebranded under its original name Forza Italia.

But the motion in the Senate heightens tension ahead of a vote to expel Berlusconi from parliament this week and is likely to cement the split between Forza Italia and Letta's coalition of left and right formed after February's deadlocked elections.

"The confidence vote is necessary not only to guarantee a quick approval (of the budget law) but also to verify ... the trust between the government and its parliamentary majority," said Parliamentary Affairs Minister Dario Franceschini.

Berlusconi, facing almost certain expulsion from parliament following a conviction for tax fraud, failed last month to bring down the government and has sounded increasingly hostile ahead of a Senate vote this week to approve his removal.

The 77-year-old billionaire has promised to break with the government and go into open opposition if Letta's centre-left Democratic Party votes for his removal from parliament as it has promised and rallies by supporters are planned in central Rome during the vote.

His threat to pull out of the coalition prompted a party split which has left 30 centre-right senators and 27 deputies supporting the government.

BUDGET

The budget, a compromise bill worked out after much wrangling between the coalition partners, includes some tax cuts on labour costs and deficit-cutting measures, but the European Commission has warned it may not respect debt reduction targets.

A vote is currently scheduled on Tuesday but may be delayed. The vote is just one part of the budget's passage through parliament, which must be completed by the end of the year.

Squabbling between the centre-left and centre-right, torn between Berlusconi's demands for tax cuts and EU pressure for budget rigour, has since largely stymied promises to address Italy's recession and pass much needed reforms.

Traditional political rivals that had campaigned against each other in the run up to February's election, the PD and Berlusconi's centre right, were forced to govern together after a split result left no side with enough seats to rule alone.

Much of time been consumed with debate over whether to scrap the hated IMU housing tax, the rallying cry of Berlusconi election campaign.

On Monday, a government source said cabinet approval of a decree to cancel IMU would now take place after the confidence and the Senate votes. Scrapping the December installment of the tax will cost the government 2.4 billion euros.

The government has pledged to contain the deficit within the European Union's ceiling of 3 percent of gross domestic product but at 133 percent of GDP product and rising, Italy's public debt burden is second only to Greece in the euro zone.