Italian government at risk of collapse

The Italian government is at risk of collapsing after Italian Prime Minister Silvio Berlusconi’s coalition allies in the Northern League party failed to reach an agreement over economic reforms.

The country’s Northern League has threatened to pull out of Berlusconi’s center-right coalition government over disputed pension reforms, The Financial Times reported.

Recent statements suggest that Umberto Bossi, the head of Italy’s Northern League, could pull out of Berlusconi’s governing coalition if his cabinet does not reach an agreement on economic measures.

Bossi rejected proposals to increase Italy’s pension age to 67 and warned that a crisis may be looming ahead for the country’s government if a deal is not reached soon.

Bossi’s possible departure could pave the way for an interim government, which may be capable of easily pushing through economic measures.

Berlusconi has been under increasing pressure to reform the country’s pension age ahead of a key European summit planned on Wednesday.

Earlier on Monday, Berlusconi called for an emergency cabinet meeting after EU leaders pressured him to restrain Italy’s debt in order to stop a eurozone debt contagion.

EU members say they will not buy Italian bonds which are necessary to refinance the country’s public debt, unless the retirement age is increased.

Rome has been pressured to implement economic reforms and budget cuts to reassure investors worried about the country’s huge debt ratio that is second only to Greece.

There is a growing fear among EU leaders that Italy could be sucked into a crisis that has already claimed Greece, Ireland and Portugal.

Rome is facing a nearly 2 trillion euro debt that is 120 percent of its Gross Domestic Product.