Italian Prime Minister-designate Enrico Letta could announce a new government today and go before Parliament to spell out its programme early next week, political sources said yesterday.

Letta, deputy leader of the centre-left Democratic Party, has been in discussions to iron out remaining differences with Silvio Berlusconi’s People of Freedom (PDL) party following an initial round of talks on Thursday.

After two months of political stalemate following an inconclusive general election in February, Letta is under pressure to move quickly and form a government capable of leading Italy out of recession.

He met both President Giorgio Napolitano and outgoing Prime Minister Mario Monti yesterday but is unlikely to announce any government until today, several people close to Letta said.

They said he would take tomorrow to prepare an initial speech to Parliament on Monday, which would be followed by confidence votes in the two Houses of Parliament.

Among the big issues remaining to be dealt with is the PDL’s demand for the abolition and repayment of the IMU housing tax introduced last year by the technocrat government of outgoing Prime Minister Mario Monti.

Scrapping the tax for 2013 and repaying last year’s contribution would blow an €8 billion hole in this year’s budget plans and create further problems for medium-term finances in the years ahead.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.