Italian President Napolitano and PM Letta pose for a family photo with newly sworn ministers at Quirinale palace in Rome

Italy’s new government has been sworn in, ending two months of political deadlock, after politicians agreed on Saturday to form a three-party coalition, which will also include technocrats in key positions.

The government, under prime minister Enrico Letta was sworn in on Sunday morning by Giorgio Napolitano, the 87-year-old head of state who applied intense pressure on the parties to bury their differences since elections in late February returned a highly divided parliament.

The ceremony was marred by a shooting. A man opened fire with a pistol outside the office of the Italian prime minister, wounding two policemen, according to witnesses quoted by television networks.

Mr Letta is to lay out his government’s programme of institutional and economic reforms to parliament on Monday, ahead of confidence votes in both chambers which, on paper, the coalition should win comfortably.

The most immediate issue he has to resolve to keep his disparate government together is Silvio Berlusconi’s demand for an abolition of an unpopular housing tax imposed last year and restitution of amounts already paid, totalling some €8bn.

Renato Brunetta, leader of their People of Liberty in the lower house, raised the stakes on Sunday by warning that the party would not support the government in the confidence vote unless Mr Letta laid out such commitments.

Mr Letta, a moderate from the Democratic party’s Catholic wing, announced the coalition deal after more than two days of talks with the centre-right People of Liberty, led by former prime minister Mr Berlusconi.

Mr Berlusconi will not be in the cabinet, but is expected to exert influence behind the scenes. His party got five posts in the 21-member cabinet, with secretary Angelino Alfano appointed deputy prime minister and interior minister.

Fabrizio Saccomanni, director-general of the Bank of Italy, was named finance minister and Emma Bonino, former European commissioner, will be foreign minister.

The centrist Civic Choice, led by caretaker prime minister Mario Monti, was given three positions, including Mario Mauro as defence minister.

“I hope that this government can get to work quickly in the spirit of fervent co-operation and without any prejudice or conflict,” Mr Napolitano told reporters. “It was and is the only possible government.”

Mr Letta said he was satisfied with his team, which he said included a record number of seven women, including Cecile Kyenge, who is of Congolese origin and takes the newly created integration portfolio.

Mr Berlusconi, who is facing several trials, including one on charges of paying for sex with an underage prostitute, had been reported to have demanded the critical post of justice minister for his party. But instead the position went to Anna Maria Cancellieri, currently interior minister in Mr Monti’s technocrat administration.

The Democrats, who narrowly won a majority in the lower house in the February elections but not the senate, took nine ministries.

The anti-establishment Five Star Movement, the third largest force in parliament after winning a quarter of votes in February, will be the largest opposition party, joined by former leftwing allies of the Democrats and rightwing parties that had been in alliance with Mr Berlusconi.

Beppe Grillo, the comic-activist leader of the movement, dismissed the coalition as “an orgy worthy of bunga bunga”, referring to the festivities allegedly involving prostitutes hosted by Mr Berlusconi in his private villas. The 76-year-old billionaire has denied any wrongdoing at his parties.

One of the first controversial issues the new government will have to address is an unpopular housing tax, introduced last year by Mr Monti, with the next payment from property owners due in June. Mr Berlusconi had demanded that the tax be abolished and that payments made last year be reimbursed, a difficult task for Italy’s tight finances with its public debt, currently some €2tn, forecast to rise to a record 130 per cent of economic output this year.

But Mr Letta has already indicated that he will lobby Europe to ease its austerity policies to give Italy more leeway with its deficit.

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