ROME - Italian Prime Minister Enrico Letta on Monday admitted his government had faced "a lot of turbulence" but said a split in Silvio Berlusconi's centre-right party would help boost stability.
Letta also warned the European Commission that its emphasis on economic austerity would boost populism and could create "the most anti-European European Parliament in history" in 2014 elections.
"I think what happened last weekend will increase stability in Italy. I think today the situation is more stable," Letta said at the Financial Times Future of Italy Summit 2013 in Rome.
Berlusconi's ex-protege Angelino Alfano on Friday said he was breaking away from the billionaire former prime minister to lead his own centre-right grouping after months of tensions between the two.
Berlusconi has threatened to leave Letta's coalition government if the Senate votes to exclude him this month over his conviction for tax fraud but Alfano, who is deputy prime minister and interior minister, has vowed to stay on.
In his address on Monday, Letta also highlighted Italy's contribution to EU bailouts, saying it was three times higher than that of the Netherlands and 10 times higher than Finland's.
He also said next year's draft budget, which is currently making its way through parliament, will reduce public debt for the first time in five years.
"The fiscal consolidation path is for us a mantra, a duty," he said.
He also restated the government's forecast that the economy will end its longest post-war recession in the last quarter of this year by growing again, but warned recovery would be gradual.
"Italy will go out of the crisis step by step. For political reasons, we cannot have a revolution," he said.