Cottarelli move sees fresh polls for Italy

Italy’s president set the country on a path back to fresh elections on Monday, appointing a former IMF official as interim prime minister with the task of planning for snap polls and getting the next budget passed.

The decision to appoint Carlo Cottarelli to form a stopgap administration sets the stage for elections that are likely to be fought over Italy’s role in the EU and the eurozone.

The eurozone’s third-largest economy has been seeking a new government since inconclusive March elections, with anti-establishment forces abandoning their efforts to form a ruling coalition at the weekend after a standoff with President Sergio Mattarella.

Mattarella vetoed the parties’ choice of a eurosceptic as economy minister, prompting the Five Star Movement and farright League party to accuse the president of betraying voters.

The prospect of another election rattled financial markets, with investors worried the vote could become a de facto referendum on Italy’s euro membership.

The euro hit a new sixmonth low and yields on Italian government bonds climbed.

The Five Star Movement was considering campaigning together with the League if the nation went back to the polls, a Five Star source said.

The centre-right Forza Italia party also said it would not vote in favour of a possible Cottarelli government.