Crisis in the eurozone

Clamour over the eurozone sovereign debt crisis showed no sign of abating on Friday as Italy prepares to pass new austerity measures to prevent a Greece-style bailout.

Italian prime minister Silvio Berlusconi has pledged to resign following the approval of the proposals by both houses of the country's parliament.

The austerity measures in the eurozone's third-largest economy come as France seeks to capitalise on the redrawing of European power-relations with a new intra-EU bloc that would effectively create a two-tier union.

Earlier this week the yield on Italian ten-year debt rose to a record seven per cent before falling back by around 0.5 percentage points. The EU said more recently that the overall growth forecast of the eurozone next year had been cut to 0.5 per cent from the previous forecast of 1.8 per cent.

At the G20 summit in Cannes earlier this month relations between eurozone leaders became even more frayed after the then Greek prime minister unveiled a surprise referendum on austerity measures an impending bailout was contingent upon, while new rifts appeared between the UK and French/German leadership on the best response to the crisis.

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