Italy government survives confidence vote on growth package

ROME Wed Jul 24, 2013 1:00pm BST

Italian Prime Minister-designate and deputy leader of the centre-left Democratic Party (PD) Enrico Letta (R) shakes hands with President Giorgio Napolitano at the Quirinale Palace in Rome, April 27, 2013. REUTERS/Alessandro Bianchi

Italian Prime Minister-designate and deputy leader of the centre-left Democratic Party (PD) Enrico Letta (R) shakes hands with President Giorgio Napolitano at the Quirinale Palace in Rome, April 27, 2013.

Credit: Reuters/Alessandro Bianchi

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ROME (Reuters) - Italy's government easily survived a confidence vote on Wednesday after President Giorgio Napolitano warned squabbling politicians not to precipitate early elections, saying uncertainty would endanger Italy.

Prime Minister Enrico Letta won the lower house vote by 427 to 167 after it was called to accelerate the passage of a package of measures to fund public works projects and cut red tape in Italy's stagnant economy.

Italy's awkward coalition, patched together from traditional rivals, has been racked by disagreements since Napolitano pushed centre-left and centre-right parties in April to rule together and end a two-month deadlock after elections in February.

Letta was expected to win the vote in any case but the head of state laid down the law beforehand to warn against any attempts to destabilise Italy at a crucial moment.

"The president has the duty to warn the country and the political parties of the very serious risks and repercussions...that further destabilisation and uncertainty in the political-institutional framework would bring for Italy," the 88-year-old president said in a letter to daily Corriere della Sera.

"I consider the frequent and easy recourse to early elections as one of the most dangerous Italian maladies," he said, referring to the endemic instability that has given Italy 64 governments since World War Two.

Letta's coalition came under threat just last week when opposition parties brought a no-confidence vote against Interior Minister Angelino Alfano for allowing a Kazakh dissident oligarch's wife and daughter be expelled at the end of May.

Alfano won the vote, but the government's approval rating has dropped in the three months since it was formed, to 42 percent on Monday from 48 percent at the end of April, polling agency IPR Marketing said.

The government's main challenge is to stimulate growth and combat the longest postwar recession in the euro zone's third-biggest economy without pushing up deficit spending.

Italy's huge debt far exceeds annual output and it is being closely watched by the European Union to ensure it does not break budget limits.

Wednesday's lower-house vote will help pass 3 billion euros in improvements to the national rail network and school buildings plus maintenance for road tunnels and bridges, without boosting the deficit.

The bill, which will also lessen electricity bills by a total of 550 million euros by reducing the tax to fund renewable energy providers, still must be approved by the Senate before it becomes law.

Napolitano, who reluctantly agreed to serve a second term as president when the parties could not agree on anybody else, has repeatedly used his power and prestige to defend the government led by centre-left politician Letta against manoeuvres by party factions.

A final verdict due next week in an appeal against former Prime Minister Silvio Berlusconi's conviction for tax fraud could bar the billionaire media tycoon from public office, with unpredictable consequences for the government.

Hawks in his centre-right People of Freedom Party, Letta's government partner, are urging him to force an election if he loses the appeal, but Berlusconi has so far urged moderation and caution, saying Italy needs a stable government to face the longest recession since the war.

(With additional reporting by Steve Scherer.; editing by Barry Moody and Alistair Lyon)

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