Berlusconi loyalist says grand-coalition government is ‘finished’

Leading figures in the Italian centre-right People of Freedom (PdL) party of convicted ex-premier Silvio Berlusconi denied speculation on Monday of a party rift over his pending ban from the Senate.

"I absolutely rule it out," PdL Lower House whip Renato Brunetta said. "Anyone hoping for a break in the PdL is making a big mistake".

Next month Berlusconi, who received his first-ever definitive criminal conviction early this month for tax fraud, faces a vote in the Senate to ratify a ban from office.

Speculation that some PdL Senators will go against the party and vote to impose the ban was fuelled after a meeting between the party's senior members on Saturday, with long-time Berlusconi loyalist and MP Daniela Santanchè claiming there were divisions between the hardliners and moderates within PdL's ranks.

"Santanchè is wrong to use such a tone, an attitude that I do not like," said deputy Senate whip Maurizio Gasparri on Monday.

Nevertheless, Santanchè told la Repubblica that the 'hawks' had won the debate and that the fragile grand coalition government headed by centre-left Prime Minister Enrico Letta was "finished."

The PdL has repeatedly threatened to pull out and topple the government if Berlusconi is kicked out of office in the upcoming Senate vote.

However, Berlusconi called on members of his party to stop making public comments regarding a possible rift in the centre-right party.

Such statements "provide the opportunity to manipulate and feed the controversy that harms internal unity," said the three-time prime minister.

Meanwhile, the political uncertainty led to the Milan stock exchange plunging 2% in Monday's early trading.

The euro zone blue chip Euro STOXX 50 index was down 0.6% at 2,809.92 points while Italy's FTSE MIB was down 1.6%.

"It doesn't look like the politicians will find a compromise to get out of this crisis, which in turn puts all measures that need to be taken to spur the economy on ice," a Milan based trader said.

"There is the risk that this could hit our economic recovery at a time when the country has shows some signs of a pick-up."

Earlier this month, Italy's supreme Court of Cassation upheld a tax-fraud conviction against Berlusconi, making a four-year prison sentence definitive.

It is the first time Berlusconi received a definitive conviction after over two dozen criminal cases since the media magnate embarked on a political career two decades ago.

The court suspended a five-year ban on Berlusconi holding public office, sending this part of the punishment back to the Milan appeals court for review. State prosecutors have requested be reduced to three years.