Mario Draghi offers to resign as Italy’s prime minister

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Italy was plunged into political chaos on Thursday after Mario Draghi, the prime minister of Italy, offered to resign following a split within his national unity government.

Former European Central Bank President said that he was unable to continue the populist Five Star Movement if the conditions are not right His government was not supportedIn a crucial parliamentary vote.

His resignation was quickly rejected by Italy’s president Sergio Mattarella, who asked Draghi Next week, he will address parliament to determine how much support his government would receive. The rejection creates time for Italy’s political class to try to patch together a compromise to prevent the country from being tipped into early elections.

But the day’s events raise increasing doubts over the longevity of the broad coalition that Draghi has led since early 2021.

“The majority of national unity that had supported this government since its creation is no longer there,” Draghi said in a statement as he offered to resign.

“From my inauguration speech, I have always said this executive would only go forward if there was a clear prospect of being able to carry out the government programme on which the political forces had voted their confidence,” he said. “Those conditions no longer exist.”

Italian stocks fell on Thursday as a FTSE gauge of equities dropped 3.4%. The yield on Italian 10-year bonds rose 0.11 percent to 3.24 Percent. This increased the gap with German 10-year yields, as investors are willing to pay a premium for Italian debt.

The crisis was triggered after Five Star — the second-largest party in parliament — boycotted a vote on Thursday on a €26bn package aimed at shielding Italians from the impact of worsening inflation.

Five Star’s leader Giuseppe Conte said he could no longer support Draghi’s government, which he accused of not doing enough to help families facing Steeping energy and food costs.

“I have a strong fear that September will be a time when families will face the choice of paying their electricity bill or buying food,” Conte said after a party meeting on Wednesday.

Five Star’s leader Giuseppe Conte © Massimo Percossi/EPA/Shutterstock

The aid package was approved by the Italian Senate with a comfortable majority, despite the protests of Five Star lawmakers. Draghi previously stated that he would only lead an Italian unity government and would not continue to serve without Five Star, the largest party in parliament. a split last month.

The uncertainty comes at a sensitive time for Italy, which is expected to be the largest single recipient of the EU’s €750bn Covid-19 recovery fund.

Early elections would raise doubts about Italy’s ability to pass its budget in the autumn and enact critical reforms to help accelerate the country’s long-term growth trajectory — on which dispersal of the EU money depends.

Paolo Gentiloni, the EU’s economy commissioner, told Italian media that Brussels was watching the political crisis “with worried amazement”.

Enrico Letta (leader of the centre left Democratic Party) said that legislators now needed to work together to stop Draghi leaving office in times of economic hardship.

“Now there are five days to work so that the Parliament confirms its loyalty to the Draghi government and Draghi and Italy exits as quickly as possible from this dramatic screw-up,” he wrote on Twitter. 

Mattarella asked Draghi last year to be the prime minister of the country still recovering from the pandemic. He was the ECB president who was credited with saving euro in the eurozone financial crisis a decade back.

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