Published: Fri, June 01, 2018
Business | By Eloise Houston

Italy heads for populist government after months of stalemate

Italy heads for populist government after months of stalemate

Salvini made clear Wednesday he preferred early elections, saying it was up to Italian President Sergio Mattarella to now chart the way forward since he rejected the proposed 5-Star-League cabinet.

The top vote-getters in the March election, the populist Five Star Movement and the right-wing League, are euroskeptics.

Anti-establishment 5-Star Movement (M5S) leader Luigi Di Maio and anti-migrant Euroskeptic League leader Matteo Salvini on Thursday agreed to form a new government with law professor Giuseppe Conte as premier.

In Spain, a political vacuum looks set to be averted as Pedro Sanchez was nearly certain to become Spain's new Prime Minister after his socialist party secured enough votes to topple Mariano Rajoy in a confidence vote scheduled on Friday over a corruption case.

"We will work resolutely to improve the quality of life of all Italians", Conte announced Thursday night after the president, Sergio Mattarella, formally asked him to lead a new government.

Adding to the selling pressure was a brewing crisis in Spain, where Prime Minister Mariano Rajoy faces a no-confidence vote after his party was found guilty of benefiting from illegal funds in a massive graft trial.

The euro on Wednesday recorded its second-biggest daily rise against the dollar this year following reports that Italy's biggest party would make a renewed attempt to form a coalition government and end months of political turmoil. "I have had enough, that is the truth", said exasperated Rome resident Teresa Gallo as she was walking to a market for her regular morning shopping. "The country needs certainties, security and equilibrium".

Because although they say they want to keep the euro - and polls show most Italian voters do too - they also want more flexibility to cut taxes, borrow and spend despite Italy already straining at the limits the European Union sets on public debt and deficits. Savona will enter the government as minister for European affairs.

Their ambitious economic proposals - which include a universal basic income for Italy's poorest, rolling back pension reform and a two tier flat tax - have anxious Brussels and financial markets given the country's sizable debt.

European markets finished firmly in negative territory on Monday as oil extended last week's slide and Italy headed for fresh elections.

Many anxious that new polls would be a de facto referendum on Italy's membership of the euro.

In recent articles, Tria has called for a change in the EU's fiscal rules to allow public investments to help growth and, like many mainstream economists, has criticized Germany's persistently large current account surplus.

In a Facebook message, Salvini said it took "dedication, coherence, listening, patience, good sense, head and heart" to get a second chance while facing "many obstacles, attacks, threats and lies".

CORNISH: But this is not the first time Italy has been through a political crisis, so what's different this time around?

Salvini will also be interior minister, with authority over immigration, and Di Maio gets the Labour and Industry portfolio.

The rally followed remarks by Italian Prime Minister-designate Carlo Cottarelli on Wednesday that possibilities had emerged "for the birth of a political government", suggesting that politicians, rather than technocrats like himself, might be able to steer the country out of deadlock. But Cottarelli has so far failed to form a viable cabinet. On Thursday, he formally gave up his mandate.

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