Prodi wins final parliamentary approval

Italy's new Prime Minister Romano Prodi won the final seal of approval from Parliament yesterday, allowing his centre-left government to get on with running a country whose public finances are spiralling out of control.

Prof. Prodi's victory in the lower house, where he enjoys a much bigger majority than in the Senate (upper house), had been expected. The chamber passed the confidence vote, the last step in the transition from Silvio Berlusconi's record five-year stint in power, with 344 yes and and 268 no votes.

"It could not have been better than this," Prof. Prodi, who won a parliamentary election last month by a razor-thin margin, told reporters after the vote.

But the good news ended there for Prof. Prodi as the Organisation for Economic Cooperation and Development (OECD) warned that his government may be too weak to achieve badly needed but unpopular economic reforms.

Prof. Prodi told Parliament ahead of the vote his priority was to drag Italy out of stagnation and stem a growing budget deficit which he said was in a critical state.

"We have gone back under the spotlight of the international markets. In the next few weeks we will take decisions on how to move," Prof. Prodi said, without specifying any policies that would likely have to include spending curbs and tax hikes.

Prof. Prodi based his election campaign on a promise of "serious" government compared with Silvio Berlusconi's tax-cutting stance, but denied accusations by his centre-right rival that once in power he would raise taxes across the board.

In its twice-yearly report on economic outlook, the Paris-based OECD said Prof. Prodi's pledge to push through economic reforms was undermined by his slim parliamentary majority.

"Political risks seem especially high," the OECD said of Prof. Prodi's ability to enact structural reforms.

"It may be difficult to undertake reforms given the thin parliamentary margins and fragmented nature of the ruling coalition," it said.

Prof. Prodi's government is drawn from eight parties stretching from Roman Catholic moderates to committed communists.

It has a majority of nearly 70 seats in the lower house, despite its slim election victory, thanks to an electoral system which handed a bundle of extra seats to the winning coalition.