Mario Draghi has resigned as Italy’s prime minister, triggering the dissolution of parliament and pushing the country into a snap election in September.
Mr Draghi quit as prime minister on Thursday a day after the three large parties in parliament boycotted a confidence vote in his leadership following a rancorous parliamentary debate.
President Sergio Mattarella, who formally accepted Mr Draghi’s resignation on Thursday, noted that the early dissolution of parliament — whose term was due to expire next year — was supposed to be a “last resort”, but that the political situation left him with no alternative.
He also expressed concern about Italy’s ability to meet “pivotal deadlines” for access to its next instalments of the €200 billion in EU coronavirus recovery funds. The election is expected to take place on September 25th.
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Mr Draghi’s exit spells trouble for Italy and Europe at a time of acute economic challenges. The sell-off in Italian debt intensified following confirmation of his resignation, with the yield on Rome’s 10-year government bond jumping as much as 0.27 percentage points to almost 3.7 per cent. The yield was up 0.15 percentage points at 3.5 per cent later in the day.
The market tumult came as the European Central Bank announced the first rise in euro zone interest rates since 2011, as well as new policies to limit the divergence between the borrowing costs of the bloc’s strongest and weakest economies, including Italy.
After weeks of mounting tensions, Mr Draghi on Wednesday accused some members of his cross-party national coalition of attempting to subvert his reform agenda and demanded that they recommit to it.
But two parties — Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia — together with the anti-establishment Five Star Movement led by Giuseppe Conte, boycotted the vote of confidence in his leadership.
Foreign minister Luigi Di Maio, who led a walkout from Five Star last month in protest at Mr Conte’s sniping at Mr Draghi’s policies, called the government’s collapse “a black page for Italy”.
“We played with the future of Italians,” Mr Di Maio wrote on Twitter after Wednesday’s developments. “The effects of this tragic choice will remain in history.”
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Italy’s inflation rate hit 8 per cent in June, its highest level since 1986, according to the statistical agency. Faltering on a tight schedule of promised reforms would also jeopardise Rome’s ability to receive the €200 billion from the EU recovery fund.
Mr Draghi had agreed an ambitious schedule of reforms with the EU with a plan to enhance competition and cut red tape to make Italy more attractive to investment, and to guarantee the sustainability of its heavy public debt, now at about 150 per cent of gross domestic product.
Many of these reforms were expected to be completed by elections scheduled for next spring but the process is likely to be put on hold.
Draghi’s exit will also be a setback to the western alliance against Russia’s invasion of Ukraine. The Italian leader has taken an uncompromising stand towards Moscow and was a key architect of the tough sanctions against Russia president Vladimir Putin.
Mr Berlusconi, a former prime minister, had close personal ties with Mr Putin, with whom he once went on holiday, while Mr Salvini has been an admirer of the Russian leader. — Copyright The Financial Times Limited 2022
(c) Copyright Thomson Reuters 2022