ROME (Bloomberg) - Italy is perceived to be so immune to the European debt crisis that even the potential fall of its government is not driving up borrowing costs as much as in Ireland, Portugal and Greece.

The extra yield investors demand to hold Portuguese and Irish 10-year debt over German bunds of similar maturity jumped to a euro-era high this week as investors bet they may be forced to follow Greece in seeking emergency European Union financing. Italy's spread widened 15 basis points to 159 this month, less than a sixth of the increase of Ireland and Portugal.

Italy's budget deficit at 5.3 percent of gross domestic product limited the need for the painful austerity measures adopted by Greece, Spain and Ireland to reduce the euro-region's three largest deficits. Prime Minister Silvio Berlusconi is pushing for passage of his 2011 deficit-cutting package in the midst of a sex scandal that has resulted in Gianfranco Fini, the co-founder of his ruling party, calling for his resignation.

"In case the government falls, we may have a movement in the spread, but not necessarily a significant one provided that fiscal discipline is ensured," said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan. "Should the parliament fail to pass the budget, it would be negative news and would scare investors."

The cost of insuring Italian debt against default fell 1.6 basis points yesterday to 196. That compares with 257 basis points for Spain, 457 for Portugal, 567 for Ireland and 866 for Greece.

Berlusconi's government moved closer to collapse after Fini, the speaker of the chamber of deputies and co-founder of Berlusconi's People of Liberty party, demanded the premier step down. In a nationally televised November 7 speech used to launch a separate political party, Fini said he would pull his ministers from the government unless Berlusconi resigned. Fini said he would negotiate a new political programme for the rest of the term that ends in 2013.

Berlusconi has no intention of leaving and Fini must assume responsibility for toppling the government by voting against the prime minister in parliament, Paolo Bonaiuti, the main government spokesman, said yesterday. Fini has enough legislative support to topple Berlusconi by opposing him in a confidence vote.

Elections in early 2011 "look increasingly likely", Lavinia Santovetti, an economist for Nomura International plc. in London, wrote in a note to investors yesterday.

"That would be no bad thing if it were to draw a line under the present political uncertainty," she wrote. "However, opinion polls currently suggest that there is a real risk of a general election resulting in a hung parliament. If such an outcome were to lead to a protracted period of political wrangling it would not only be bad for Italy but, given Italy's importance, could just trigger a renewed outbreak of negative sentiment in markets about the euro too."

The crisis is coming to a head just as parliament prepares to vote on the 2011 budget. The plan includes 11 billion euros ($15.2 billion) of spending cuts and savings without resorting to the lower wages and tax increases implemented in Greece, Spain, Ireland and Portugal.

Berlusconi admitted helping the girl, sending his former dental hygienist and now a local politician for his party, to take custody of the girl upon her release. Berlusconi said in Brussels after an October 29 summit of European Union leaders that he acted because he had a big heart and was moved by the girl's "tragic situation".