ITALY’S financial outlook darkened today amid warnings that 10 cities are at risk of bankruptcy and schools may not be able to open in the autumn because of drastic spending cuts.
The cities at risk of running out of money include Naples, Palermo in Sicily and Reggio Calabria, on the toe of the Italian boot, according to the Italian press.
"The situation is becoming worse by the day," said Graziano Del Rio, the president of a national association of municipal councils.
The warning came just days after Mario Monti, the prime minister, expressed fears that Sicily, which has a high degree of fiscal autonomy, was on the brink of a default.
Cities and towns in southern Italy have for years been plagued by mismanagement, corruption, the wasteful use of EU funds and infiltration by the Mafia. But the "black list" of cities at risk also includes some in the north of Italy such as Alessandria, in the Piedmont region.
Italy's regions face "a serious situation", said Annamaria Cancellieri, the interior minister, although she downplayed concerns that Sicily would be forced to default.
Deep cuts to Italy's provinces may mean that some schools will not be able to open after the summer holidays, the president of the provincial government association said. "With these cuts we won't be able to guarantee the opening of the school year," said Giuseppe Castiglione.
Mr Monti hopes to reduce the country's €2 trillion national debt by dissolving 64 of Italy's 107 provinces, addressing long-standing concerns that they are an unnecessary and wasteful tier of government.
The government plans to slash €500m from the provinces' budgets this year and a further €1bn in 2013.
The Monti government is pushing ahead with an ambitious spending review that envisages cuts to government services worth €26bn over the next three years.
Mr Monti reiterated that he will step down in Spring 2013, paving the way for elections.
Silvio Berlusconi has indicated that he will try to become prime minister for a fourth time, a declaration that has only increased market nervousness over Italy's economic future.
Telegraph Media Group Limited