Sergio Mattarella, Italy’s President, now faces appointing a caretaker government to take the country to a new election, after a last-ditch attempt to get bickering party leaders to agree a deal to form a government failed.
The anti-establishment Five Star Movement won the most seats in parliament of any single party in Italy’s general election in March. The far-right League won the most votes in a centre-right coalition with former disgraced prime minister Silvio Berlusconi. Traditional parties such as Mr Berlusconi’s centre-right Forza Italia party and the centre-left Democratic party (PD) suffered heavy losses. No party or coalition won enough votes to win a majority in parliament.
Five Star tried to separately strike coalition deals with the League and the incumbent PD. Luigi Di Maio, the Five Star leader, and Matteo Salvini, who leads the League, both expressed interest in a populist alliance, but Mr Salvini refused to split with Mr Berlusconi’s Forza Italia to enter into a coalition with Five Star. At the weekend, Mr Di Maio made one last overture to Mr Salvini, dropping his own insistence on being the next prime minister as long as Mr Salvini cut ties with Mr Berlusconi, who is seen by Five Star as a symbol of the country’s corrupt political establishment, but his proposal was rejected. Meanwhile, talks between Five Star and the PD were scotched after Matteo Renzi, Italy’s former centre-left prime minister, said he would not back a government led by Mr Di Maio’s party.
Mr Mattarella asked Italy’s political leaders to support a neutral caretaker government led by a nonpartisan figure that would last until they formed a sustainable parliamentary majority or until a new election.
Both Five Star and the League are pressing for an election in July. Mr Mattarella wants to hold off a general election for the rest of the year, because the warm weather in the summer could depress turnout and the autumn date would jeopardise the passage of the 2019 budget. There is also a risk that another election would produce another political stalemate.
Italy’s main stocks benchmark, the FTSE Mib, ended the day with a loss of 1.6 per cent. Investors were also selling Italian government debt, sending yields higher. The yield on the benchmark 10-year bond was up 9 basis points to 1.86 per cent. The spread between Italy’s 10-year bonds and similarly dated German Bunds widened to 130 basis points. Political uncertainty in the eurozone’s third-biggest economy was weighing on the euro. The shared currency was down 0.4 per cent against the dollar at €1.1879 and 0.3 per cent weaker versus sterling at £0.8770.
Photo: Montecitorio
