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Italian Prime Minister Mario Draghi resigns after failing to reinstate his coalition government


Italian Prime Minister Mario Draghi

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Prime Minister of Italy Mario Draghi is expected to step down on Thursday, paving the way for new elections and ushering in a new chapter of political turmoil.

Addressing Parliament, Draghi said he would meet President Sergio Mattarella and inform him of his intentions after failing to unify his fragile coalition government.

“Thanks for all the work we’ve done together during this period. Following last night’s vote by the Republican senate, I request a pause in this session because I’m on my way. President of the Republic to communicate.According to a spokesman, Draghi told lawmakers.

It comes after Draghi was snubbed by coalition partners in a vote of confidence in the Senate on Wednesday, meaning the government has collapsed.

Although it managed to win votes, the left-wing Five Star Movement, one of the parties in the coalition government, said it would not participate. The ruling Lega party and the Forza Italia party also said they would not participate.

It paves the way for difficult and uncertain elections, which could take place in September or October.

Last week, Mattarella Reject Draghi .’s First Resignation and asked him to lead more negotiations with lawmakers in the hope of avoiding snap elections.

That comes after the Five Star Movement opposed a new decree aimed at reducing inflation and combating rising energy costs. Italian lawmakers held a vote of confidence on the wide-ranging policy package, but the Five Star boycotted the move, angering both Draghi and the far-right parties in the coalition.

Draghi, before European Central Bank The Premier, then asked by Mattarella to return to the upper house and hold a vote of confidence in the government on Wednesday, means Italian politics has been in limbo for the past week.

Output increased

Italian bond yields rose on Thursday on expectations that Draghi would step down. Yields on 10-year government bonds rose to 3.6350% at around 10 a.m. local time; it was about 1% at the beginning of the year.

Also, the stock market was lower in the news on Thursday. Italy’s main index, FTSE MIBwas trading nearly 2% lower in early European trading.

There are several reasons why investors are concerned about Italy. First of all, opinion polls point to a divided parliament, meaning new elections could lead to difficult coalition negotiations.

At the same time, Italy, one of the most indebted countries in Europe, is facing record inflation and limited growth prospects. This macroeconomic backdrop becomes especially difficult as the European Central Bank prepares to raise interest rates, which could hamper future Italian economic activity.

“Judging by some long-term fundamentals, Italy is slowly turning into an accident waiting to happen,” said Holger Schmieding, chief economist at Berenberg.

He cites three major issues: low growth trends, dismal demographics, and trends in the political scene.

“For now, we have to brace ourselves against disruptive noises but not a real euro 2.0 crisis,” he added.

Stable month

Over the weekend, hundreds of mayors signed an open letter asking Draghi to stay. Union leaders and industrialists also came together to demand that Draghi stay in office. Meanwhile, thousands of citizens have also signed an online petition asking Draghi to stay, according to AP.

Technocrat leader Draghi has brought political stability to Italy over the past 15 months, which has played a key role in receiving a pandemic recovery fund amounting to almost 200 billion euros ($205 billion).

His leadership is also crucial amid Russia’s invasion of Ukraine, with Draghi playing a role in EU sanctions and helping Italian households cope with higher consumer prices.



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