As the Italian premier flew to the G20 summit in Cannes, his fractured cabinet continued to bicker after failing to agree measures to slash debt and satisfy sceptical speculators, while new parliamentary rebels threatened to sink his fragile coalition.

There had been rumours that an emergency cabinet meeting late on Wednesday night would produce “drastic measures”, including a wealth tax on the rich, to shore up Italy’s coffers. But an emergency decree needed to force such measures through was rejected, principally by Mr Berlusconi’s cabinet nemesis, the Finance Minister, Giulio Tremonti, according to press reports.

The meeting even failed to produce details on key measures to liberalise the economy and reform pensions that had been pledged to the EU last week.

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