By Gavin Jones
ROME (Reuters) - Italy's former Economy Minister Giulio Tremonti announced on Wednesday he was setting up his own political movement ahead of elections to be held by next spring, potentially siphoning support from Silvio Berlusconi's People of Freedom party.
Tremonti, who served four stints as minister under center-right leader Berlusconi between 1994 and 2011, said his movement would aim to regulate financial markets more strictly and save Italy from losing sovereignty and being "colonized".
Italy's political parties are already in election fighting mode but financial markets still have no idea about the make-up of the next governing coalition, who the leaders will be or even what electoral law will be used.
The center-right and center-left coalitions which contested the last election in 2008 have splintered since the fall of Berlusconi's government last year, protest movements have gathered strength and new parties are constantly emerging.
Tremonti did not say what his movement would be called. He said it would not be a traditional party and would aim recruit "above all, young people."
It is likely to compete for votes with Berlusconi's People of Freedom (PDL), which has seen a massive hemorrhage of support since Berlusconi's fall from power.
Relations between Berlusconi and Tremonti deteriorated last year, as Tremonti resisted his leader's attempts to raise flagging support by cutting taxes and raising spending.
Renato Mannheimer, president of polling firm ISPO, said Tremonti would probably draw support among centrist and center right voters who follow politics closely.
"It's too soon to estimate how many votes he might get, but I see his support being more among a niche of highly educated voters rather than the masses, so I don't think he will be a major threat," he said.
The PDL's National Secretary Angelino Alfano said he wished Tremonti "good luck" in his new political path.
Tremonti, who was widely credited for keeping a tight rein on Italy's public finances until a surge in bond yields sucked it into the euro zone debt crisis in mid-2011, attacked both Prime Minister Mario Monti and the PDL.
He accused Monti of increasing rather than reducing red tape for business, and said the PDL's plan to sell hundreds of billions euros of state assets was so unrealistic it should be called "Plan P for Pinocchio."
Tremonti said his manifesto would include a block on derivatives trading and legislation preventing retail banks from trading on financial markets.
(Reporting by Gavin Jones; Editing by Jon Boyle)