* Government would have to resign if all centre-right yanks support
* Berlusconi attacks magistrates as "dictators," says Italy not democracy
* Berlusconi says Monti government keeps Italy in recession spiral (Recasts with news conference, threat to withdraw govt support)
By Philip Pullella
ROME, Oct 27 Former Prime Minister Silvio Berlusconi said on Saturday his centre-right bloc may withdraw its support from the government of Mario Monti, a move that could throw Italy into political chaos ahead of next April's national elections.
"We have to recognise the fact that the initiative of this government is a continuation of a spiral of recession for our economy," Berlusconi told a news conference in northern Italy a day after he was convicted and sentenced to four years for tax fraud related to his Mediaset media empire.
"Together with my collaborators we will decide in the next few days whether it is better to immediately withdraw our confidence in this government or keep it, given the elections that are scheduled," he said.
The Monti government of non-elected technocrats is supported by the centre-left, the centre-right and the centre. It would lose its majority and have to resign if the entire centre-right, including Berlusconi's PDL party, withdrew support.
Monti took office as prime minister last November when Italy's bond yields were soaring. He has pushed through tax hikes, spending cuts and a pension overhaul to cut public debt which is running at 126 percent of gross domestic product, according to the International Monetary Fund.
Unemployment in Italy has risen to 10.7 percent, its highest level since monthly records began in 2004, and unions are locked in disputes with companies over plant closures and layoffs.
Berlusconi, a 76-year-old billionaire media magnate, gave no precise timing for when the decision on whether to keep supporting Monti or not would be made.
An indication of the centre-right's strength will come on Sunday when Sicilians go to the polls to elect a new regional government.
ATTACKS GERMANY, MERKEL, SARKOZY
Berlusconi also condemned the Monti government for following what he called the "hegemonistic" economic policies of Germany and accused German Chancellor Angela Merkel and former French President Nicolas Sarkozy of "trying to assassinate my international political credibility" when he was prime minister.
Berlusconi was convicted on Friday of inflating prices paid for television rights via offshore companies and skimming off money to create illegal slush funds.
The court imposed a five-year ban on running for political office but since the sentence does not come into effect until all appeals are exhausted, Berlusconi can run for parliament in the next national elections in April.
In an interview earlier on Saturday he had suggested that he might not leave front-line politics as expected, although he later confirmed that he would not be a candidate for prime minister. He did not rule out running for parliament.
The former prime minister, who was convicted three times during the 1990s in the first degree before being cleared by higher courts, has the right to appeal the ruling two more times before the sentence becomes definitive.
He has often accused magistrates of waging a political war against him.
"Ours is not a democracy but a dictatorship of the magistrature," he said, listing the amount of time and money he has had to spend to defend himself in trials he says are all based on unfounded accusations.
The court ruling said that between 2000 and 2003 there had been "a very significant amount of tax evasion" and "an incredible mechanism of fraud" in place around the buying and selling of broadcast rights by Mediaset.
Berlusconi, whose "bunga bunga" parties with aspiring starlets won worldwide notoriety, has taken a largely backseat role in politics since he was forced to step down, but he remains the dominant figure within the PDL.
His standing with the general public has fallen sharply after the array of sexual and political scandals and an opinion poll last month gave him just 18 percent support, well behind Angelino Alfano, the PDL's 42-year-old secretary. (Additional reporting by Elisa Anzolin; Editing by Jon Hemming and Jason Webb)