How did Italy’s euro-zone debt crisis weaken Silvio Berlusconi’s government?

Italy’s euro-zone debt crisis significantly weakened Silvio Berlusconi’s government by undermining international and domestic confidence in his administration’s ability to manage the country’s massive public debt.12

As the euro-zone debt crisis escalated, Italy’s high debt levels—approaching €2 trillion—drew intense scrutiny from financial markets. Berlusconi’s political instability, combined with a public feud with his finance minister, Giulio Tremonti, further pressured the Italian bond market, causing interest rates on 10-year government bonds to surpass 6 percent.132

In response to these pressures, the government attempted to implement austerity measures, but these efforts were widely judged as insufficient by investors. Following a credit rating downgrade by Standard & Poor’s and widespread labor strikes, Berlusconi’s parliamentary support eroded. On November 8, 2011, he effectively lost his majority during a key budget vote. He subsequently resigned on November 12, 2011, after the parliament passed the required budget reforms, leading to the appointment of a technocratic government under Mario Monti to restore economic stability.124