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Updated 23:50 20/02/20

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Italian government plunged into chaos as coalition collapses

Michael Pinson, News Editor
21 Aug 2019, 11:18 a.m.

Italy’s coalition government has broken apart, with Prime Minister Giuseppe Conte resigning yesterday afternoon and launching a blistering attack on coalition partner Matteo Salvini.

A tenuous agreement between the far-right Lega Nord party and the anti-establishment Five Star Movement has been strained in recent weeks, with Matteo Salvini’s Lega enjoying an increase in support. In the 2018 general election, the League achieved only 17% of the vote, but in recent European polls they came top with 34% of the vote share.

Salvini tabled a no-confidence vote in Prime Minister Conte last week, saying that he could no longer work with the Five Star Movement - or the middleman PM in Giuseppe Conte.

Conte resigned begrudgingly yesterday afternoon, calling Salvini “irresponsible”, and claiming that he was causing political chaos for “personal and party interests”.

President Sergio Mattarella is now in charge by default until a new government can be formed. This could involve a snap election being called this autumn – just 17 months after the previous one. Alternatively, consultation of parties to see if a new majority can be formed may be a way round the impasse, or installing a caretaker government to oversee the passing of Italy’s budget for 2020.

The move saw Italy's FTSE MIB stock index drop by almost 200 points, as investor fear turned them away from Italian companies. Italy has already been in recession this year, and only achieved growth of 0.1% in Q1, leaving them perilously close to slipping back into recession. This would be Italy’s fourth recession in a decade, and seems plausible given other, stronger Eurozone economies are also struggling (such as Germany).

The political uncertainty caused by yesterday’s resignation will do little to help Italy’s economy, and puts Italy high on the list of countries with the risk of recession looming over them.

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