Italian PM announces resignation and attacks deputy Matteo Salvini
Italian Prime Minister Giuseppe Conte announced his resignation to the country’s senate this afternoon and launched a blistering attack on deputy prime minister and League party leader Matteo Salvini.
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In a remarkable speech to the Italian upper chamber, Conte said Italy could enter a “downward spiral” and laid the blame largely at the door of Salvini, who sat stony-faced beside him.
Conte’s resignation, which will come later today, pushes Italy further into political turmoil. It comes two weeks after Salvini called for new elections, ending the uneasy coalition with the anti-establishment Five Star Movement that has ruled Italy since 2018.
Conte said Salvini “has shown that he is following his own interests and those of his party”. He said: “His decisions pose serious risks for this country.”
Salvini had shown “serious institutional recklessness,” Conte said, “above all showing disrespect to parliament and liable to tip the country into a spiral of political uncertainty and financial instability”.
Italy’s FTSE MIB stock index had fallen one per cent by 4.20pm UK time with the uncertainty dragging down other European markets. The euro slipped back against the dollar and was broadly flat.
Yet yields on Italian government bonds surprised analysts and fell despite the political drama, reducing the so-called spread compared to German bond yields which has been closely-watched since the Eurozone crisis. Yields move inversely to prices.
President to seek way forward
Conte said he would resign to President Sergio Mattarella who will try to find a way forward via a new coalition. If this is not possible, Italy faces new elections.
As Conte attacked the League leader’s character and role in the government, Salvini sat to his left, at times nodding sarcastically and gesturing to his party’s MPs.
On his right sat Five Star leader Luigi Di Maio, whose party has dropped in the polls as the League has surged thanks in large part to the latter’s anti-immigration stance and populist economic policies.
Salvini responded by saying other parties were scared of facing Italian voters again. He once again challenged European Union rules on public spending and called for a €50m (£45.6m) stimulus package.
Despite Conte’s resignation, yields on 10-year Italian government debt had fallen 7.2 basis points to 1.353 per cent by 4.20pm UK time, while two-year yields had fallen 7.6 basis points to 0.018 per cent.
Andrew Kenningham, chief Europe economist at Capital Economics, said investors have been reacting to the prospect of a new coalition forming rather than new elections, which Conte called “irresponsible”.
“It does seem that the President would be keen to try to avoid there being elections. Conte seemed to be keen to,” he said, adding that due to its unpopularity in the polls, Five Star might want “to do a deal with anybody”.
Read more: Italian markets in turmoil as government edges closer to collapse
Kenningham said a government formed of just the League party “would be if anything worse than the outgoing coalition” for Italian markets.
(Image credit: Getty)