Berlusconi under pressure despite winning key vote

Italy's shambolic political situation looked set to continue last night after Silvio Berlusconi scraped through a parliamentary confidence vote, which only served to underline the fragility of his right-wing coalition.

After days of rising political tension, the government won the vote by 316 votes to 301. The 75-year-old Prime Minister had issued dire warnings that Italy would be thrown into disarray if his government fell in the midst of a financial crisis.

But with economists and other European nations calling for decisive leadership in Italy, it is now up to Mr Berlusconi's coalition, riven by in-fighting and dismissed as incompetent by business leaders, to show it is strong enough to boost growth, slash debt and prevent the eurozone financial crisis escalating even further.

Before yesterday's vote, the Italian press was already dismissive of Mr Berlusconi's ability to lead Italy out of the crisis. Of his pre-vote pep talk to parliamentary allies, La Stampa said: "Not one new thought was expressed... Berlusconi has by now become a factor that is immobilising and freezing Italian politics."

Three ratings agencies have downgraded Italy's public debt. "With Mr Berlusconi still at the helm, there is nothing that Italy can do from within that will restore market confidence," said Sony Kapoor, managing director of Re-Define, an economic think-tank.

Mr Berlusconi had been forced to call yesterday's confidence vote after his government failed to pass a routine budget provision on Tuesday, partly because of poor organisation and partly because it has only a slim majority. The embarrassing setback may yet hold up parliamentary business on vital budget legislation.

The animosity between the Prime Minister and his Finance Minister, Giulio Tremonti, is adding to market jitters. Earlier this month it was widely reported that Mr Tremonti told Mr Berlusconi: "Silvio, don't you understand? You're the problem," when the premier asked how his government might beat the speculators.