Prime Minister Giuseppe Conte talking to reporters.
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LONDON – Italy’s latest political crisis will not eventually lead to a populist or anti-EU government in Rome, with a former minister telling CNBC that the country is seeking a new administration in the midst of an epidemic.
Italy is facing political uncertainty after former Prime Minister Matteo Renzi pulled his support for the current coalition government. His small party – Italia Viva – had supported the Five Star Movement and the Democratic Party, two pro-EU parties that have been in power since the summer of 2019.
However, differences over how to spend the upcoming European recovery funds led Renzi to remove his support and the resignation of the two Italia Viva ministers. It included former Minister for Family and Former Opportunities Elena Bonetti.
“What we are not willing to do is to form an alliance with a populist, anti-European right-wing government,” Bonetti told CNBC’s Jomana Bursete to ask further about the formation of the government when possible.
The three-party alliance was important to keep anti-EU leaders away from the previous political crisis in the summer of 2019. But the support of the anti-immigration and anti-EU parties is solid in Italy, where Lega and the Brothers of Italy are currently voting first and third respectively.
“We believe that we must firmly place Italy’s future prospects in a European context. Therefore, there will be no populist or anti-European option,” Bonetti said.
Financial markets have in the past reacted to comments from anti-EU politicians in Italy, who have suggested, for example, that the country would be superior to the euro zone – a 19-member region in Europe where countries share the same currency.
The latest crisis has increased yields on 10-year Italian benchmark bonds during the past week, but the impact on the market overall is somewhat contained.
The European Central Bank has been conducting large-scale government bond purchases due to the epidemic and the European Union continues to scale at an unprecedented level throughout the region. Monetary and fiscal responses have reduced borrowing costs for European governments.
But the Italian political crisis comes at a particularly challenging time, with Kovid-19 showing no signs of decreasing numbers of infections, and economic damage that could see a 10% GDP (GDP) contraction by 2020.
Lega Party leader Matteo Salvini spoke to the press regarding the government crisis and demanded Prime Minister Conte’s resignation and new elections.
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Prime Minister Giuseppe Conte is due to address the current crisis next week, but it is still unclear whether he will maintain his position and which parties can form a new government together.
Wolfango Piccoli, co-chairman of the research firm Tenno, said in a suggestion that Conte took some time to spare the time left by Renee’s party, while trying to find enough MPs from other parties to consider his move. Can. The current crisis may drag on for some time.
There are three main options for resolving the deadlock: a new coalition government, perhaps with a different prime minister; A government created mostly by people without political affiliation but with significant technical knowledge; Or prevent elections, which the ruling parties want to avoid.
“We think the contacts are likely to remain in charge,” said Federico Santi, senior analyst at consultancy firm Eurasia Group.
He also said that “snap elections are unlikely now,” but if they were, “the ruling parties would be likely to suffer a serious setback in the event of an election, paving the way for a right-wing eurosceptic government” . “