‘New possibilities’ for the formation of new Italian government

Italy’s premier-designate has said “new possibilities” have emerged over the forming of a government based on the outcome of the 4 March election.

Carlo Cottarelli also wants to give the option time to mature, given the negative market reaction to the prospect of a new poll.

Efforts to create a so-called “political” government failed over the weekend after President Sergio Mattarella vetoed an economy minister proposed by the 5-Star Movement and the League, which had come together to form a populist alliance.

After more than two months of failed negotiations Mr Mattarella then turned to former IMF official Mr Cottarelli to form a neutral government made up of technocrats to lead Italy until early elections.

The prospect of a new vote fuelled by anti-establishment and populist outrage sent stock markets and investor confidence plunging in Europe’s third-largest economy. However, yesterday Mr Cottarelli said “new possibilities for the birth of a political government have emerged” during his consultations.

The statement added: “This circumstance, also considering market tensions, has compelled him to wait for further developments.”

Officials at Mr Mattarella’s office said the president had agreed with the decision.

Markets relaxed with the news, with the Milan stock exchange maintaining its upward momentum, up 0.8 per cent. It was not clear what shape a political government might take.

Economic analyst Lorenzo Codogno said the re-emergence of a possible political government would likely mean tweaks to the 5-Starleague coalition agreement and dropping the Eurosceptic Paolo Savona from the post of economy minister.

Mr Mattarella had vetoed Mr Savona, a former industry minister who has questioned whether Italy should keep the euro, leading to the collapse of the 5-Star-league bid.

Mr Codogno said: “The initiative for a new anti-establishment government... would have to imply a credible proeuropean commitment and a commitment to the Italian Constitution, ie the fiscal framework, to have any chance of flying.”

The head of the anti-establishment 5-Stars, Luigi Di Maio,hadproposedarenewed effort to form an alliance with the right-wing League on Tuesday night, backing off his threat of launching impeachment proceedings against Mr Mattarella and insisting that the two blocs still enjoy a parliamentary majority.

Mr Di Maio said: “We’re ready to reconsider our position in the sense that if we made a mistake – something I doubt – we’ll say so, but now we should respect the will of the people.”