Italy looks likely to hold early election

Italy seems likely to call an election by mid-April after the Senate speaker gave up trying to form a temporary government to end a political stand-off triggered by Romano Prodi's resignation as Prime Minister.

Centre-right opposition leader Silvio Berlusconi wants an early election because he is riding high in opinion polls and hopes to return to the office of Prime Minister he has held twice before.

Many economists say another government elected under current electoral rules will prove just as unstable as Mr Prodi's, and some worry another free-spending Berlusconi government will undo the centre-left's work on cutting the budget deficit.

Senate speaker Franco Marini, who had been asked by President Giorgio Napolitano to seek cross-party backing for an interim administration to reform the electoral system ahead of an election, said on Monday there was no such support.

"I could not find a significant majority on a precise electoral reform," Mr Marini said as he left Mr Napolitano's office after handing back his mandate on forming a new government.

Mr Napolitano appears to have little choice now but to dissolve Parliament and call an election. He could theoretically ask Mr Marini or someone else to try again but that is considered unlikely as the centre-right is sure to reject further advances.

"We hope ... the head of state will call elections immediately because the country quickly needs an efficient government to solve its grave problems," Mr Berlusconi, a 71-year-old media tycoon, told reporters.

Business leaders have pleaded for stability since Italy's 61st post-war government collapsed last month after Mr Prodi lost a confidence vote in Parliament following defections from his centre-left coalition. He had been in power for only 20 months.

Data has shown Italian business confidence hitting its lowest since the end of 2005 - when Mr Berlusconi was in power and the economy was stagnating - and a think-tank has trimmed its growth forecast for this year to 0.9 per cent from 1.4 per cent.

Employers' group head Luca Cordero di Montezemolo, who favours electoral reform, urged an end to "years of rivalry and ungovernability so that we can guarantee growth because we grow less than any other European country".

Walter Veltroni, Mr Prodi's heir as centre-left leader who would face Mr Berlusconi in an election, had hoped for a delay in calling an election.

"I think this risks being a missed opportunity for Italian politics, rushing towards elections with a flawed law," he said.

Mr Prodi quit after constant arguing in his nine-party coalition came to a head with the defection of a small Catholic party that erased his tiny majority in the Senate.