Mr Prodi's finance minister, Tommaso Padoa-Schioppa, had crafted an austerity package that relied heavily on tax increases.

ECONOMIST: The budget passes, but more troubles loom ahead

The draft budget drawn up by the finance minister, Tommaso Padoa-Schioppa, is being modified in response to lobbying by different parties in the coalition.

ECONOMIST: The centre-left holds on for now; can Silvio Berlusconi?

They admit, however, that Consob, the stockmarket regulator, has improved since Tommaso Padoa-Schioppa, a former deputy general manager of the central bank, became its boss in April.

ECONOMIST: Italy��s stock exchange