A showdown in Italian politics between Letta and Renzi ends in a draw

Italy's Prime Minister, Enrico Letta speaks during a press conference on February 3, 2014.

Italy's Matteo Renzi, locked in a confrontation with Prime Minister Enrico Letta over the future of the government, will state his position on the matter on Thursday morning.

"I read many conjectures about the government. What I have to say, I'll say tomorrow at [9 a.m.] at the leadership meeting, openly, with live video streaming," Florence Mayor Renzi wrote on Twitter on Wednesday.

The comment came after the two met to discuss the government's future amid increasing speculation that Renzi may replace Letta at the head of the fragile ruling coalition.

A source from the premier's office told Reuters that both men "left their positions unchanged" after the meeting.

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The two met in Letta's office in Palazzo Chigi a day before a meeting of the 140-strong leadership group of the center-left Democratic Party (PD) that is due to decide whether the largest party in the coalition will continue to support the prime minister.

After days of gathering tension and repeated criticism by Renzi of the Letta government's failure to pass significant economic reforms, expectations have risen that the prime minister will stand aside.

Letta, a low-profile moderate appointed in April to lead a government patched together after last year's deadlocked election, has kept his unwieldy coalition together but has struggled to pull Italy out of its worst postwar recession.

He promised to unveil a package of measures on Wednesday but it was unclear of he would go ahead with the announcement.

Renzi's victory in a PD leadership primary in December has shaken up politics in Italy and complicated the position of Letta, who is from the same party. A change in premier would add an unpredictable new element to an already volatile situation.

"The political situation is really complicated. You'd need Doctor House to understand what's going on in the PD," Health Minister Beatrice Lorenzin told RAI state radio on Wednesday, referring to the brilliant diagnostician in the television drama of the same name.

The political ructions in Italy, the euro zone's third largest economy, have so far left financial markets undisturbed with the risk premium on Italian 10 year bonds over safer German Bunds below 200 basis points, comparable with levels seen before the euro zone debt crisis exploded in 2011.

But the continual uncertainty has held back reforms needed to pull Italy from a slump that has seen its economy shrink by more than 9 percent since 2007 and sent unemployment to levels not seen since the 1970s.

Renzi, an ambitious and fast-talking 39-year-old whose main experience of government has been as mayor of Florence, has said repeatedly that if the coalition cannot get things done it would be better to hold new elections.

However he is as aware as anyone that until the electoral law that produced last year's stalemate is changed, any new vote would almost certainly produce another impasse.

Opinion polls suggest that Italian voters do not want to see a change of premier without elections, with a survey in Wednesday's La Stampa suggesting that no more than 14 percent wanted to see Renzi taking over before a new vote.