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| Italy PM-designate Enrico Letta agrees new government | Italy PM-designate Enrico Letta agrees new government |
| (about 1 hour later) | |
| A deal on the formation of a new government has been reached in Italy, ending two months of political deadlock since the general election. | A deal on the formation of a new government has been reached in Italy, ending two months of political deadlock since the general election. |
| The agreement was announced after Prime Minister-designate Enrico Letta met President Giorgio Napolitano. | The agreement was announced after Prime Minister-designate Enrico Letta met President Giorgio Napolitano. |
| The coalition brings together Mr Letta's Democratic Party (PD) and the People of Freedom party (PDL) of former PM Silvio Berlusconi. | The coalition brings together Mr Letta's Democratic Party (PD) and the People of Freedom party (PDL) of former PM Silvio Berlusconi. |
| The swearing-in is to take place on Sunday at 11:30 local time (09:30 GMT). | The swearing-in is to take place on Sunday at 11:30 local time (09:30 GMT). |
| Mr Berlusconi had said he would not be a minister, but had pushed for leading figures from his party to be given top posts. | Mr Berlusconi had said he would not be a minister, but had pushed for leading figures from his party to be given top posts. |
| Angelino Alfano, the PDL's secretary, will become deputy prime minister and interior minister in the new government. | Angelino Alfano, the PDL's secretary, will become deputy prime minister and interior minister in the new government. |
| Among the other key appointments proposed, Bank of Italy director general Fabrizio Saccomanni will head the powerful economy ministry and former European Commissioner Emma Bonino will become foreign minister. | |
| The formation of the new government brings to an end a political deadlock that has unnerved financial markets since February's inconclusive election. | The formation of the new government brings to an end a political deadlock that has unnerved financial markets since February's inconclusive election. |
| President Napolitano said the government would have the support of both chambers of parliament. | President Napolitano said the government would have the support of both chambers of parliament. |
| "I hope that this government can get to work quickly in the spirit of fervent co-operation and without any prejudice or conflict," he said. | "I hope that this government can get to work quickly in the spirit of fervent co-operation and without any prejudice or conflict," he said. |
| "It was and is the only possible government." | "It was and is the only possible government." |
| The BBC's David Willey, in Rome, says the new government has to deal with a rapidly declining economic situation, rising unemployment - particularly among under the 35s - and lack of growth, despite some draconian austerity measures passed by the previous government of technocrats. | The BBC's David Willey, in Rome, says the new government has to deal with a rapidly declining economic situation, rising unemployment - particularly among under the 35s - and lack of growth, despite some draconian austerity measures passed by the previous government of technocrats. |
| Berlusconi charges | Berlusconi charges |
| Mr Letta, 46, is considered a moderate within the PD and is linked to Mr Berlusconi through his uncle, Gianni Letta, who is one of Mr Berlusconi's closest aides. | Mr Letta, 46, is considered a moderate within the PD and is linked to Mr Berlusconi through his uncle, Gianni Letta, who is one of Mr Berlusconi's closest aides. |
| Mr Berlusconi is still contesting charges of tax fraud and sex with an underage prostitute, but recent opinion polls suggest his popularity has increased, giving him greater bargaining power. | Mr Berlusconi is still contesting charges of tax fraud and sex with an underage prostitute, but recent opinion polls suggest his popularity has increased, giving him greater bargaining power. |
| Mr Letta expressed "sober satisfaction over the team we put together". | Mr Letta expressed "sober satisfaction over the team we put together". |
| He has said he will shift the focus away from austerity to resolve Europe's economic problems. | He has said he will shift the focus away from austerity to resolve Europe's economic problems. |
| His candidacy for prime minister emerged after the PD leader, Pier Luigi Bersani, announced his resignation following a party rebellion over his choice for Italian president and his refusal to work with Mr Berlusconi. | His candidacy for prime minister emerged after the PD leader, Pier Luigi Bersani, announced his resignation following a party rebellion over his choice for Italian president and his refusal to work with Mr Berlusconi. |
| The third strongest force to emerge from the Italian election, the Five Star movement led by former comedian, Beppe Grillo, has refused to take part in a coalition with the two main parties. | The third strongest force to emerge from the Italian election, the Five Star movement led by former comedian, Beppe Grillo, has refused to take part in a coalition with the two main parties. |
| He likened such a coalition to "an orgy worthy of the best of bunga bunga" in a barb directed at Mr Berlusconi's renowned private parties. | He likened such a coalition to "an orgy worthy of the best of bunga bunga" in a barb directed at Mr Berlusconi's renowned private parties. |
| President Napolitano, who is serving an unprecedented second term, has suggested he might resign if a new government fails to enact reforms. | President Napolitano, who is serving an unprecedented second term, has suggested he might resign if a new government fails to enact reforms. |