Barely emerging from a political crisis, Prime Minister Silvio Berlusconi held his new cabinet's first meeting Friday amid stark warnings that Italy's industrial production, competitiveness and employment were in dire need of a boost.
Luca Cordero di Montezemolo, head of Italy's employers' federation, said the situation was "serious," announcing that industrial production had been stagnant for the past four years and was practically at a standstill in the first months of 2005.
The federation called for urgent action, including a "moderation" of salaries and an increase in working hours to "face the loss of competitiveness."
More bad news came from Italy's statistics institute: 14,000 jobs have been cut in the past year in Italy's large businesses, with the textile industry alone losing 4.3 percent of jobs.
In a speech at the Senate ahead of the new government's confidence vote, Berlusconi said Thursday that Italy was battling for the European Union to impose a quota on Chinese textiles to defend European production from the cheap imports.
The prime minister's new government completed its formal induction Thursday, putting an end to a weeks-long political crisis that threatened to trigger snap elections.
In an interview with Corriere della Sera Friday, Berlusconi acknowledged that his centre-right House of Freedoms coalition would have lost the elections had they been held in the next few months.
"We would have lost and handed over the country to the left," Berlusconi said.
The 68-year-old prime minister wants his fractious coalition allies to join in a single centre-right party before general elections due in May 2006.
But Berlusconi is struggling to convince his allies to dissolve their parties and join the new grouping.
"For the time being, we are opposed to this," Roberto Maroni, cabinet minister and member of the coalition's Northern League, said Friday.
Also in question is Berlusconi's leadership.
In the interview, the prime minister insisted that his political career was far from over, but admitted, "no one is irreplaceable."
The media magnate said he was ready for another term in office, adding: "I plan to put everything I've got on the single party."
Numerous voices within the coalition have said that if a new party is created it cannot be a party based around Berlusconi, particularly after his House of Freedoms coalition suffered a severe defeat in regional elections early this month.
Even members of his own Forza Italia have said that primaries would be held to choose the leader of the next party.