Italy government talks end with no solution in sight

Italy remained in political limbo on Friday after talks to break a deadlock created by inconclusive polls ended with no solution in sight, leaving the make-up of the future government of the eurozone's third largest economy in the hands of the president, AFP reports. After a day-long round of consultations with President Giorgio Napolitano, the country's parties appeared to be as far as ever from resolving a stalemate left after the centre-left won the February ballot by a whisker but failed to secure a key majority in the senate. "The president will take some time for reflection," said spokesman Pasquale Cascella, adding that there would be no further announcements on Friday. Napolitano could announce his decision on Saturday, as European capitals and financial markets watch to see if stability will be restored amid renewed turbulence in the eurozone. Analysts said he may nominate a prime minister candidate from outside the party political sphere -- an arrangement similar to the one that brought Mario Monti to power in 2011. A former European commissioner, Monti kept public finances in check and launched key reforms but was punished at the ballot box by widespread opposition to his austerity measures. Another possibility is that Napolitano could try to push through some kind of right-left coalition, though that option looked increasingly distant after Friday's talks. A third, most drastic option could see him resign -- kicking off a process which would see his successor dissolve parliament and call new elections in the recession-hit country. The centre-left, Italy's biggest block, ruled out the possibility of a cross-party coalition after talks with Napolitano, and said it trusted the president to decide what was best for the country. Leftist leader Pier Luigi Bersani had been tasked by Napolitano to seek the support necessary to govern, but six days of talks ended in failure on Thursday, prompting the president to call a last-ditch round of negotiations on Friday. The Democratic Party's deputy leader Enrico Letta summed up the day's consultations, saying they had been repeatedly turned down in their attempts to find a solution. "Whatever the president's decision is, he will have our support," Letta said, ruling out however any "grand coalition" with the scandal-hit former prime minister Silvio Berlusconi. But the billionaire tycoon called for the parties to "find a way to govern together as a coalition," saying: "We believe an agreement can be found." The country's third political force, the Five Star movement, said it would "not support either a coalition government of political parties, or one made up of politicians camouflaged as technocrats." Any new government would need to win confidence votes in both houses of parliament. Most analysts predict that Italy will be forced to hold new elections within months at the earliest, since stability is unlikely with the current three-way split of parliamentary forces. The debt-laden country is mired in its longest recession in 20 years and unemployment has spiralled to record highs, with young people particularly hard hit. Italy's main business daily Il Sole 24 Ore issued a stark warning to bickering politicians with a front-page headline reading: "Stop the Games". Editor Roberto Napoletano warned of a "political vacuum" even as the country faced an economic emergency, adding: "There is no time to lose." Business leaders and trade unions have sounded the alarm over the social implications of dragging out the political stalemate rather than launching growth reforms as soon as possible. Monti's cabinet will remain in place until a new government is formed, although it has effectively been operating with interim powers since December. While the political crisis has had a relatively muted effect on investors so far -- mainly because of confidence in reforms carried out by Monti -- a race is on to resolve it by Tuesday, when the markets reopen after the Easter holiday.