Italian Prime Minister Silvio Berlusconi has refused to step down despite growing desertions from his crumbling centre-right coalition in protest over the ruling party's handling of an accelerating economic crisis.
Berlusconi is widely believed to have already lost the numbers he needs to survive in parliament but told reporters at a G20 summit in France: "We have a majority which I continue to believe is solid and so we will continue to govern."
The 75-year-old media magnate described party rebels as traitors to the country but said they would return to the fold once he spoke to them, despite the economic crisis that has fuelled an open revolt in his ruling PDL party.
Underlining the foreboding atmosphere, yields on 10-year Italian bonds hit a euro lifetime high of 6.43 per cent at one point, close to levels which led to bailouts of Ireland and Portugal.
President Giorgio Napolitano issued the latest in a series of alarmed calls for political consensus to pass painful economic reforms, saying the country was suffering a grave crisis of international confidence.
Berlusconi, caught in the crossfire from European powers and the party revolt at home, agreed at the summit to IMF monitoring of economic reforms which he has long promised but failed to implement. He said he had turned down an offer of IMF funding for Italy.
All this may soon be irrelevant to the prime minister who returned home on Friday to face what looks increasingly like a deadly rebellion by his own supporters.
The strains in his government were on display in Cannes where economy minister Giulio Tremonti - with whom he has long had frigid relations - refused to directly answer a question on whether he agreed Berlusconi could continue.
City A.M. Reporter