Talks on Tuesday morning between Mr Berlusconi and his Northern League coalition partners failed to resolve the deadlock – centred on proposed pension reforms – after negotiations into Monday night made little progress.
“The government is at risk,” Umberto Bossi, leader of the fiercely eurosceptic and federalist Northern League, told reporters in Rome. “The situation is difficult, very dangerous. This is a dramatic moment,” he was quoted as saying.
Commentators said the crisis was the most serious facing Mr Berlusconi since his election victory in 2008, recalling memories of 1994 when the Northern League brought down his first government after just a few months.
The prime minister’s People of Liberty party has proposed that the pension age be raised to 67 years from 65 in line with increasing life expectancy, and that the system of length-of-service pensions also be modified. The Northern League is opposed and La Padania, its party newspaper, on Tuesday attacked what it called “euro-tyranny”.
Altero Matteoli, a PDL minister, said a collapse of the government was a “hypothesis”. He also noted that talks were continuing and that a compromise with the Northern League was still possible.
In other news, it appears that the spin which is so far keeping the Euro from collapsing on tomorrow's now disclosed EcoFin meeting cancellation is that even though Europe's finance ministers can not agree, 24 hours ahead of the deadline, on the formulation of the most complex SPV ever conceived, somehow the Eurozone leaders will succeed...