Italian Deadlock Broken With New PM

Created: 2013-04-25 03:09 EST

Category: World

The wait is finally over.

Italy has a new Prime Minister after two months without one.

Enrico Letta has got the job, stepping up from deputy of the centre-left Democratic party.

[Enrico Letta, Prime Minister]:
"Everyone knows that this is a situation that can not stay like this. In this sense I have accepted this role, this invite and this responsibility and it is something I feel the weight of on my shoulders."

Newly re-elected President Giorgio Napolitano made the appointment after just one day of talks.

The political stalemate may be over, but not everyone's happy with the choice.

"I am not happy. In fact I am here to show my disappointment."

[Matteo Padanini, Pensioner]:
"Do we want to change or not? They all say: 'Let's change, let's change, let's change' and then when it comes to choosing the people they always pick the same ones.''

''I think he is a fairly balanced person and that he has common sense. I hope he will manage to form the government.''

It's certainly not going to be easy for Letta.

The new government will be a grand coalition, uniting his centre-left with Silvio Berlusconi's centre-right.

The former Prime Minister backed the deal in talks on Tuesday.

But the reality is these two are far apart.

The prospect of a deal with their arch-rival has angered many centre-left supporters, even jeering the party's politicians yesterday as they arrived for talks.

Although the public's not convinced, it seems the markets are.

Two-year borrowing costs tumbled to a euro-era low on the news with yields a third lower than a month ago.

But analysts warn that could change if the government doesn't act fast.

Alastair McCaig at IG markets.

[Alastair Mccaig, Market Analyst]:
"The likes of the bond markets have been relatively forgiving towards the Italians while we've had two or so months of uncertainty hanging over them. It'll be interesting to see how long that forgiveness is passed on to the Italians before I think bond markets maybe get a little bit more aggressive with wanting to see some productive steps forwards."

Unemployment and a sky-high debt are the top priorities.

Letta's first task though is to form a government.

A mix of politicians and technocrats is expected, potentially by the end of the week.