This article is more than 2 years old

This article is more than 2 years old

A standoff over Italy’s future in the eurozone has forced the resignation of the populist prime minister-in-waiting, Giuseppe Conte, after the country’s president refused to accept Conte’s controversial choice for finance minister.

Sergio Mattarella, the Italian president who was installed by a previous pro-EU government, refused to accept the nomination for finance minister of Paolo Savona, an 81-year-old former industry minister who has called Italy’s entry into the euro a “historic mistake”.

With no progressive force to give it shape, Italians’ anger has hit a wall | Kenan Malik Read more

“I have given up my mandate to form the government of change,” Conte told reporters after leaving failed talks with Mattarella.

Italy has been without a government since elections on 4 March ended in a hung parliament.

Mattarella summoned a former official at the International Monetary Fund, Carlo Cottarelli – known as “Mr Scissors” for making cuts to public spending in Italy – to the presidential palace on Monday morning, which was interpreted as a sign that Cottarelli would be asked to form a government of unelected technocrats.

Mattarella is expected to ask Cottarelli to form a government, but he will struggle to gain the approval of parliament with the Five Star Movement (M5S) and the the far-right Lega (formerly the Northern League) commanding a majority in both houses.

Mattarella’s move could risk a constitutional crisis, and the country is now expected to go to the polls again in autumn.



Facebook Twitter Pinterest Carlo Cottarelli arrives at Termini railway station in Rome. Photograph: Angelo Carconi/EPA

The president’s move to quash Savona’s nomination on Sunday was unprecedented in recent history, and exposed a deep divide between Mattarella, who serves as the head of state and is suppose to be politically neutral, and the two populist parties – the M5SLega (formerly the Northern League) – who have struggled desperately to form a government and support a more antagonistic relationship with Brussels.



The leaders of MS5 and Lega, Luigi Di Maio and Matteo Salvini, denounced the veto, decrying what they called meddling by Germany, ratings agencies and financial lobbies. Di Maio also called for Mattarella to be impeached.

Mattarella defended his decision by saying that naming Savona as finance minister – which he already said he opposed – posed a risk for Italian families and citizens, because it created uncertainty in the Italian economy.

“I asked for that ministry an authoritative political figure from the coalition parties who was not seen as the supporter of a line that could provoke Italy’s exit from the euro,” Mattarella said.

Italy’s policies make sense, it’s eurozone rules that are absurd | Larry Elliott Read more

“The uncertainty over our position within the euro has alarmed Italian and foreign investors who have invested in securities and companies,” he said.



The president said the increase in bond market spreads last week – a sign of growing unease and lack of confidence in Italy – would reduce the opportunity for social spending, and posed risks to Italians.

It was an extraordinary indication that Mattarella believes that preserving Italy’s place in the eurozone is fundamental to the country’s financial security and future. Both parties have in the past suggested they would support an exit from the euro, but moderated their views during their election campaign earlier this year.

Salvini, the bombastic head of the far-right Lega, angrily denounced the decision to block Savona, his personal choice for finance minister, saying that Mattarella had overstepped his authority and was revealing bias against a qualified individual.

“In a democracy, if we are still in a democracy, there’s only one thing to do, let the Italians have their say,” Salvini said.

Facebook Twitter Pinterest Sergio Mattarella talks to journalists after Conte’s resignation. Photograph: Alessandra Benedetti/Corbis via Getty Images

He said Italy wasn’t a “colony”, and that “we won’t have Germany tell us what to do”.

Di Maio, who heads the M5S, also criticised the decision.

“In this country, you can be a condemned criminal, a tax fraud convict, under investigation for corruption and be a minister … but if you criticise Europe, you cannot be an economy minister,” he said.

“I hope that we can give the floor to Italians as soon as possible, but first we need to clear things up. First the impeachment of Mattarella ... then to the polls,” he said.

Mattarella’s move to reject Savona prompted Conte, a political newcomer who was given the mandate to form a government on Thursday, to step down from his prime minister post, before he had even formally started the job.

Conte, an academic and lawyer with no political experience, said he had given “the maximum effort and attention” to accomplishing his task, but had been unable to do so despite the “full collaboration” of the coalition partners.



Conte received the mandate last week to try to form a viable government from the rival populist forces, who disagree on so much that they have proposed equipping their government with a “conciliation committee” to settle its internal differences.



The developments on Sunday night put Italy on an uncertain path. Some analysts have believed that any move by Mattarella to push against the populist parties would only serve to agitate their supporters, and fuel anti-euro sentiment in Italy. They have argued that new elections could create an even bigger majority for the M5S and the Lega.

Before Conte or Mattarella had even finished their meeting, Salvini said the only option was to hold another election, probably later this year.

Europe has made little secret of its concern at the planned new government’s intentions. The loudest alarm bells are ringing over the parties’ stated ambition to rewrite the EU’s rules and pursue domestic policies which combine rises in public spending promised by M5S with tax cuts favoured by the Lega.

The trade commissioner, Cecilia Malmstöm, said “there are some things there that are worrying” about Italy’s incoming government.

Economists calculate the cost of the coalition’s promises – lower taxes, higher benefits, earlier retirement – could reach €170bn (£150bn), about 10% of Italy’s GDP. This would add to the country’s €2.1tn debt mountain and potentially trigger the EU’s worst-case scenario: a Greek-style debt crisis in the eurozone’s third-biggest economy.