President Giovanni Leone of Italy has begun the traditional task of consulting with the country's leading politicians on the formation of Italy's 37th Government since the fall of Mussolini in 1943.
GV EXT Quirinal Palace
GV Ex Presidnet Giovanni Gronchi walking past jounalists
GV Ex President of Social Democrats walsk up and speaks to reporters
SV Cameraman PAN TO Saragat
MV Saragat walks away after statement
Initials BB/2328 RS/AH/BB/2339
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Background: President Giovanni Leone of Italy has begun the traditional task of consulting with the country's leading politicians on the formation of Italy's 37th Government since the fall of Mussolini in 1943.
The new Government faces what has been described as Italy's most serious economic and political crisis since the Second World War.
When the consultations are over political commentators believe that eventually the Christian Democrats, who hold 38 per cent of the Parliamentary vote, may form a minority caretaker Government which would need the "external" support of its partners in the former Centre-Left Coalition -- the Socialists and the Social Democrats.
The three month old coalition fell on Monday (10 June) after the Socialist Party and the Christian Democrats failed to agree on an economic package to deal with a record balance of payments, an inflation rate running at 20 per cent a year and a steadily declining lire.
The Socialist Party insisted credit restrictions be eased for small and medium sized businesses to avoid massive unemployment. The Christian Democrats insisted on a continued credit squeeze to reduce overall demand.
The consultation process is expected to be finished by Thursday evening (13 June). On Tuesday (11 June) among the visitors to the Quirinal Palace to see President Leone were Giovanni Gronchi of the Christian Democrats ex President of the Republic and Social Democrat ex President Giuseppe Saragat.