Italy's senate is due to vote on an austerity package that will cut $67bn from the budget over three years.
The government has also announced its plans to sell stakes in state owned companies.
Speculation over whether Italy is next in line for a Greek-style bail-out hit a nerve on investor confidence.
At the beginning of the week, the stock exchange plunged to new lows and so did the profits of big corporations and the country's biggest banks.
Italians are already feeling the strain.
Al Jazeera's Claudio Lavanga reports from Rome.
