Italy's premier's office has confirmed Berlusconi's People of Freedom (PDL) party has seen an en masse resignation of ministers, as the governmental chaos of the last few days rattles on.
This morning, European shares fell following Italian cabinet resignations, making the possibility of a new election ever-more real.
The pan-European FTSEurofirst 300 was down 0.7 per cent at 1,245.67 at 12.19 BST, and Reuters reported this morning that the Italian blue-chip FTSE MIB fell 1.9 percent, the biggest percentage faller among major European bourses and suffering its worst session for six weeks after former premier Silvio Berlusconi's party withdrew its ministers from cabinet.
Despite concerns, and Italian shares leading the market lower, European shares have stayed at near five-year highs and expectations remain for the best quarter in two years.
Capital Economics comments on the current chaos:
Silvio Berlusconi’s decision to withdraw his support for the coalition Government may not trigger elections. But the fragile political situation highlights the huge challenges that Italy faces just to make further inroads into its budget deficit, let alone implement much need growth-boosting reforms.