Italy: Mario Draghi to offer resignation
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While the Italian Prime Minister was no friend of Brexit, his departure could trigger a series of events which could expose the British taxpayer to £200 billion of losses. The Italian Prime Minister and former European Central Bank (ECB) President said he would resign on Thursday after the 5-Star Movement, a party in his ruling coalition failed to support a confidence vote, plunging Italy into political chaos yet again.
He told his cabinet: “I will tender my resignation to the president of the republic this evening.
“The national unity coalition that backed this government no longer exists.”
The confidence vote had become a focal point for tensions within his government as its parties prepare to fight each other in a national election due by early 2023.
Former Italian Prime Minister Giuseppe Conte, leader of the 5-star, triggered a sequence of events that prompted Mr Draghi to say he would quit by deciding to boycott the confidence vote in the Italian Parliament.
The former ECB chief had said he would not want to lead a government without the 5-Star, which emerged as the largest party in the previous election in 2018 but has since suffered defections and a loss of public support.
Later on Thursday evening, Italian President Sergio Mattarella rejected Mr Draghi’s resignations and asked him to address parliament to get a clear picture of the political situation.
President Mattarella will either try to persuade Mr Draghi to form another government, find a new caretaker leader to take Italy to an election next year or call an early election.
But leading political experts in Italy have pointed to the instability of the coalition which was behind Draghi.
Michela Morizzo, the chief executive of Italian polling company Techne said: “The government crisis in Italy was not a surprise to the country. The majority that supported Draghi administration arose from a forced coalition between very different parties.
“The approaching next Parliamentary elections has increased tensions – with the breaking point coming when the 5 Star Movement, a party in a crisis of identity and consensus, started to slip away.
“The Italian political system, at this point, begins an electoral path in a moment of political weakness and with the electoral geometries still to be defined in terms of coalitions.
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“To all this is added a very difficult economic context, with inflation out of control and an energy crisis that threatens to take millions of people over the poverty line and many businesses to go bankrupt.”
Italy has not had an autumn election since World War Two as that is normally when the budget is drawn up and approved by parliament.
The risks of a collapse of a Draghi government rippled through financial markets on Thursday where Italian bond yields rose sharply, indicating investors demanding a higher premium to hold its debt, and shares fell to their lowest levels since late 2020.
Italy, the third largest economy in the eurozone, is already facing challenging economic times with borrowing costs skyrocketing as the ECB starts tightening its monetary policy.
Worryingly, as economist Bob Lyddon highlighted in a piece for Express.co.uk yesterday, the UK is exposed to £200 billion of losses if the eurozone collapses, threatening to plunge the economy here into chaos.
His departure also spells big troubles for the EU at a time the bloc is facing a deep energy crisis caused by Russia’s attack on Ukraine.
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Mr Draghi would also leave at a time Brussels lacks a strongly backed political figure, with French President Emmanuel Macron currently leading a minority government and German Chancellor Olaf Scholz still failing to convince EU citizens he is a worthy replacement of Angela Merkel.
The move also risks undermining efforts to secure billions of euros in European Union funds.
To make things worse for the EU, an early election could see far-right Brothers of Italy leader Giorgia Meloni securing the biggest share of the votes, according to latest polls.
Ms Meloni, a staunch eurosceptic, refused to vote in favour of Mr Draghi’s technocratic government despite subscribing to a right-wing coalition with government-backing Matteo Salvini’s Lega and Silvio Berlusconi’s Forza Italia parties.
At the news of Mr Draghi’s resignation, Ms Meloni tweeted: “This legislature is over. We will fight so that Italian citizens will be given the utmost right of all democracies: the freedom to choose who to be represented.”
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