Silvio Berlusconi’s administration has lost sovereignty and its lack of credibility has hit Italy’s reputation abroad, according to former European Competition Commissioner Mario Monti.
Monti, who has been muted as a possible replacement for Berlusconi at the helm of a technical Italian government, used a op-ed in the widely read newspaper Corriere della to outline his views on why Italy now finds itself in so much trouble.
Firstly he believes Italy’s government has little dignity. "I'm sorry Italy is seen as a country whose economic decisions are imposed by others as opposed to taking them with conviction,“ he wrote.
This has led to a lack of credibility with international markets, according to Monti.
"What happened over the past week does not contribute to Italy's reputation abroad. This has serious implications not only for Italy's prestige but also for its efficacy," said Monti, who believes Berlusconi wasted valuable time on putting austerity measures in place.
"The decisions imposed by the markets and Europe are geared towards stability rather than growth. Investors are more concerned about Italy's solvency than about the insufficient economic growth," added Monti, who is concerned growth will not now play a central role in turning Italy around.
The comments came before the ECB signalled its intention to support Italy and Spain in the bond market. That move has sent Italian bond yields sharply lower and boosted stocks in Milan.