The Italian President Sergio Mattarella on Monday asked Carlo Cottarelli, an economist and former executive director of the International Monetary Fund, to form a technocratic government to steer the eurozone’s third-largest economy back to the polls.
Giuseppe Conte, the designated prime minister of a coalition made up of the anti-establishment Five Star Movement and the far-right League, on Sunday abandoned plans to cobble together a team of ministers when Mr Mattarella blocked the nomination of an avowedly Eurosceptic economist Paolo Savona as finance minister on the grounds that his policies might drive Italy out of the euro.
Mr Savona has repeatedly called on the government to plan for a possible euro exit and criticised of what he sees as German dominance of the European Union.
Some lawmakers within the populist coalition have called for Mr Mattarella’s impeachment for abusing his constitutional powers, even though the constitution gives the Italian president the final word on cabinet appointments.
Mr Cottarelli said he hoped to secure backing in parliament for a tenure that would last until the end of the year, but both Five Star and the League, which control the lion’s share of seats in parliament, said they would vote against him in parliamentary votes of confidence, which would trigger fresh elections as soon as September.
Mr Mattarella’s gamble could backfire and strengthen the country’s populist Eurosceptic parties ahead of a snap general election. The League is likely to outperform its March 4 result, when it secured 17 per cent of the vote. Five Star, which won 33 per cent of the vote in the election, has stagnated in the polls.
Five Star and the League favour big spending increases and tax cuts aimed at reviving the sluggish economy, despite Italy’s public debt that stands at 132 per cent of GDP, the second highest debt-to-GDP ratio in the European Union.
The yield on Italy’s benchmark 10-year sovereign bonds jumped 12 basis points to 2.67 percent on Monday. The spread between Italian and German 10-year bonds, a widely watched indicator of eurozone political stress, reached the widest in over four years. The FTSE MIB Italian stock benchmark declined 2.1 per cent, with bank leading the way lower. Italy’s stock market almost wiped out its 2018 gains. The euro was down 0.2 per cent against the dollar at $1.1627.
Photo: Presidencia de la República Mexicana
