ROME — In his narrowest escape yet, Prime Minister Silvio Berlusconi barely survived a confidence vote on Friday, saving his government from collapse but leaving it all but incapable of legislating effectively. 
 
 With 316 votes for and 301 votes against, Mr. Berlusconi’s center-right coalition won the vote. But it failed to secure a solid majority, making it increasingly difficult for him to pass legislation aimed at protecting Italy from Europe’s sovereign debt crisis. Had he lost, Mr. Berlusconi would have had to resign, marking the end of an 18-year political era in which the billionaire businessman shaped Italian politics in his own image, entwining the country’s fate with his own. 
 
 In what the daily Corriere della Sera called “an atmosphere of interminable agony,” analysts said the Berlusconi government was now hanging by a thread and could fall at the next bump in the road — when enough disgruntled lawmakers from within Mr. Berlusconi’s coalition calculate that they would be safer jumping off a sinking ship rather than staying aboard and risking drowning. 
 
 Mr. Berlusconi called the confidence vote after failing to pass a routine measure this week. Addressing lawmakers on Thursday, the prime minister said he was the only “credible alternative” able to govern Italy through the economic crisis, and refused to step down. 
 
 Since 2009, the European debt crisis has felled governments in Ireland, Portugal and Slovakia, led to early elections in Spain and a cabinet reshuffle in Greece. So far, Mr. Berlusconi has proven to be a tough outlier — not least because the European Central Bank in August agreed to buy Italian debt. But the bank did this in exchange for promised structural changes that the government has not yet carried out, a mix of tax increases and changes to the pension system. The results of Friday’s vote promise to make that even more difficult. 
 
 This week, opposition leaders — and the president of Italy, in an unusually strong statement — told Mr. Berlusconi that surviving a confidence vote was not the same as governing. In the statement, President Giorgio Napolitano said the prime minister had to show the “necessary cohesion” to tackle Italy’s budget deficits and to propose “adequate solutions to the urgent problems of the country, including in meeting its European obligations.” 
 
 Despite deep divisions over economic policy, the center-left opposition has repeatedly called on Mr. Berlusconi to step down. 
 
 “This government will die from confidence,” the leader of the center-left opposition, Pierluigi Bersani, said after Friday’s vote, the ANSA news agency reported. “Starting tomorrow, the political problems will be even more evident,” he added, reiterating his calls for Mr. Berlusconi to step down. Another leading opposition politician, Antonio Di Pietro of the Italy of Values Party, has repeatedly accused Mr. Berlusconi of buying the votes of would-be dissidents within his own center-right coalition. 
 
 On Friday, Mr. Berlusconi was saved by loyalists who prefer to have the government limp along rather than fall and potentially be replaced by a group of nonpolitical technocrats with a mandate to carry out the structural changes including tax increases, changes to the pension system and a growth stimulus bill now deadlocked in Parliament. 
 
 Foreign investors and many of Italy’s business leaders hope for such a technical government, but lawmakers have resisted out of fears of losing power. 
 
 Friday’s vote made clear that Italy had been living with the shadow of Mr. Berlusconi. 
 
 “In this interminable twilight, the man who was Berlusconi remains true to his salesman’s essence,” the satirist and political commentator Massimo Gramellini wrote recently in the Turin daily La Stampa. He will continue to survive, Mr. Gramellini added, until his supporters “start to deny that a man like that, capable of selling us nothing for 20 years, ever really existed.” ||||| ROME Italian Prime Minister Silvio Berlusconi said on Tuesday he would resign after suffering a humiliating setback in parliament that showed a party revolt had stripped him of a majority. 
 
 Berlusconi confirmed a statement from President Giorgio Napolitano that he would step down as soon as parliament passed urgent budget reforms demanded by European leaders after Italy was sucked into epicenter of the euro zone debt crisis. 
 
 The votes in both houses of parliament are likely this month and they would spell the end of a 17-year dominance of Italy by the flamboyant billionaire media magnate. 
 
 His failure to implement reforms fueled a party revolt and Berlusconi told his own Canale 5 television station that the only option was an early election. However, this could prolong the uncertainty that has sapped market confidence. 
 
 Napolitano said he would now hold consultations on the formation of a new government. Markets and Napolitano himself are thought to favor a technocrat or national unity government. 
 
 Berlusconi's government won a key budget vote after the opposition abstained on Tuesday but failed to secure a majority, obtaining only 308 votes in the 630-seat lower house, eight short of the 316 needed to be sure of passing legislation. 
 
 Pier Luigi Bersani, the leader of the main opposition Democratic Party, said Italy ran a real risk of losing access to financial markets after political uncertainty pushed yields on government bonds toward a red line of 7 percent. 
 
 "I ask you, Mr Prime Minister, with all my strength, to finally take account of the situation ... and resign," Bersani said immediately after the vote. 
 
 Italy, considered too big to bail out, has replaced Greece as the main cause for concern in the euro zone's sovereign debt crisis. 
 
 ON THE ROPES 
 
 Berlusconi has been on the ropes for weeks, beset by a string of sex and legal scandals, political defeats and, most crucially, a loss of confidence on international markets. 
 
 But the 75-year-old, who has dominated Italian politics for most of the past two decades, had steadfastly refused to step down until Tuesday's vote and battled until the last to win over rebels in his PDL party. 
 
 The vote showed he had failed to stem the revolt and Berlusconi's bitterness was revealed by a photographer who caught the words "8 traitors" jotted down on his notepad in parliament after the result was read out by the speaker. 
 
 The news that Berlusconi had finally agreed to resign came after European markets closed but the euro jumped against the dollar and U.S. stocks edged up. 
 
 Earlier, Berlusconi's key coalition ally Umberto Bossi, head of the devolutionist Northern League, said Berlusconi should be replaced by Angelino Alfano, secretary of the premier's PDL party. 
 
 The League, and many members of the PDL, were believed to have wanted Berlusconi to make way for a new center-right government to restore the confidence of markets without handing power to a transitional administration. 
 
 The center-left opposition said they had abstained to lay bare the weakness of Berlusconi's support, while allowing formal ratification of the 2010 budget. 
 
 Interest rates on Italy's debt have soared to levels that are causing deep concern about whether the euro zone can survive if its third largest economy cannot service its debts. 
 
 BOND YIELDS SOAR 
 
 Yields on Italy's 10-year benchmark bonds rose to 6.74 percent on Tuesday before dropping back. Analysts said Italy was reaching the point at which Portugal, Greece and Ireland had been forced to seek a bailout. 
 
 Finnish Prime Minister Jyrki Katainen said Italy was just too big to bail out. "It is difficult to see that we in Europe would have resources to take a country of the size of Italy into the bailout program," he told parliament in Helsinki. 
 
 As the spread between Italian and German bonds -- a reflection of the extra risk of holding Italian bonds -- approached 5 percent, Italian employers' association leader Emma Marcegaglia said: "We can't go on like this for long." 
 
 Analysts say current interest rates, if maintained, would cancel out the budget savings planned as part of a painful austerity program. 
 
 Even when Berlusconi goes, there is no guarantee that reforms to cut Italy's debt and boost growth will be quickly implemented and relief on markets may not last long. 
 
 There is no agreement among political parties on either a national unity or technocratic government and Napolitano's consultations may be difficult. 
 
 Berlusconi and his closest allies say appointment of a government of technocrats -- the option favored by markets and it is thought Napolitano -- would be an undemocratic "coup" that ignored the 2008 election result that brought the center right to power. 
 
 (Additional reporting by Paolo Biondi, Giselda Vagnoni, Roberto Landucci, Francesca Piscioneri, Philip Pullella and Catherine Hornby; Editing by Andrew Roche)
– Silvio Berlusconi squeaked through a confidence vote in the Italian parliament today, but the agonizingly close 316-301 vote didn’t exactly inspire, well, confidence. Berlusconi’s majority is so slim that it effectively cannot pass legislation, the New York Times reports, and analysts say that the slightest bump in the road could break the fragile coalition entirely. Berlusconi called the vote himself after failing a routine vote this week and refusing calls to step down. Berlusconi survived thanks to loyalists afraid his government would be replaced by a non-political technocratic one seeking structural changes to Italy’s economy—a government they’d have no place in. Of course, many business leaders were hoping for exactly that. “The best signal that Italy could have sent to the markets would have been to boot Mr. Berlusconi out, but it has failed to do so,” one economic think tank director tells the AP. Opponents, meanwhile, complained that Berlusconi can win confidence votes, but cannot govern. “He only knows how to stay stuck in his seat using tricks,” one opposition leader complained.