ROME ? Italy's borrowing rates spiked to a new euro high Monday and talk of early elections grew, as pressure mounted on Premier Silvio Berlusconi to resign so a new government could pass the economic reforms that Italy needs avoid a financial disaster.
The premier denied reports that he was considering stepping down, saying they were "without foundation."
In the last few weeks, Italy has become the new focus of the eurozone debt crisis, as its debts are huge, its growth is slow, and its economy too large to bail out. Investors want the government to quickly pass measures to boost growth and cut debt, but Berlusconi's majority in parliament is weakening by the day.
There is growing concern that Berlusconi himself is the problem because he no longer commands enough loyalty to ensure the quick reforms that European and international financial officials say Rome must achieve to avoid a dramatic debt crisis like the one that is bringing Greece to its knees.
His coalition government has suffered defections and the possibility of early elections is growing.
The ultimate fear is that Italy ? the third-largest economy in the eurozone ? might need an international bailout to handle its enormous euro1.9 trillion ($2.6 trillion) debt. That is too expensive for Europe to handle, and could trigger a default that would break up the 17-nation eurozone and drag down the global economy.
On the bond markets, the yield on Italy's 10-year bonds jumped another 0.33 of a percentage point Monday to 6.58 percent, its highest level since the euro was established in 1999. That is drawing uncomfortably near the 7 percent threshold that forced both Ireland and Portugal to accept bailouts.
During a G-20 summit last week, Berlusconi had to ask the International Monetary Fund to monitor the country's reform efforts, a humiliating step for such a large economy.
Berlusconi was meeting Monday with his children and friends at his villa near Milan for lunch, sparking Italian media to speculate he was devising an exit strategy. But the lunch is a long family tradition and his official Facebook page said "the reports of my resignation are without foundation."
Public administration minister Renato Brunetta, a Berlusconi loyalist, acknowledged Monday that the government has a "numbers problem" in parliament and said if a majority is lacking then "everybody goes home."
Interior Minister Roberto Maroni agreed, adding "it is useless to persist."
James Walson, professor of political science at the American University of Rome. said Berlusconi's time was quickly running out.
"He could go tomorrow. He could go next week. The sort of pressure that he is under, coming from his own people, will make it sooner than later," he said.
But Berlusconi has remained defiant, insisting he still commands enough support in Parliament to enact the reforms.
"We maintain that there are no alternatives to our government until 2013," when elections are due, Berlusconi told a political gathering Sunday.
This week brings the first in a string of votes in Parliament on reforms and other stopgap measures to lower Italy's debt ? now at 120 percent of GDP ? and revive the dormant economy.
The new reform measures include a plan to sell government assets, which is expected to raise euro5 billion ($6.9 billion) a year over the next three years; and tax breaks to encourage employment for the young and to get women back into the work force in a country where youth unemployment is 29 percent and just 48 percent of women have jobs. The legislation would also allow stores to stay open on Sundays and open up closed professions.
Berlusconi has also pledged to raise the retirement age to 67 for all workers to match European trends, despite the fierce resistance of his allies in the Northern League.
If Berlusconi's forces lose upcoming votes in parliament, the Italian president, who has repeatedly urged Berlusconi to take decisive steps immediately to rescue the nation, could intervene and rule that it is time for a new government. But only the loss of a confidence vote can force a government to resign.
The leader of Italy's largest labor confederation, meanwhile, is predicting 2012 will be a "terrifying" year for the economy even if the beleaguered Berlusconi leaves power soon. CGIL leader Susanna Camusso on Monday also slammed Berlusconi's anti-crisis plan as containing virtually nothing to spark economic growth.
"I hope there will be (early elections), and that they will be soon for the good of the country," she told The Associated Press.
The European commission monitoring mission is expected in Rome later this week. It will be separate from IMF monitoring, so there will be two reports.
Mario Draghi, an Italian who just took over as European Central Bank president, said last week that since joining the euro, Italy had enjoyed unnaturally low interest rates for years because its monetary policy was linked to that of stronger economies like Germany.
"For a long time spreads between sovereign bonds in the euro area were very narrow. In point of fact, they did not reflect the different realities of different countries," Draghi told reporters.
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