Italy crisis: Coalition talks resume as parties agree on PM Published duration 27 August 2019

image copyright Getty Images image caption Luigi Di Maio said hours of talks on Monday had achieved nothing

Talks to form a new government in Italy have resumed after populist and centre-left leaders agreed that Giuseppe Conte should stay on as prime minister.

The Five Star Movement and the Democratic Party (PD) have until Wednesday morning to form a coalition.

If they fail, President Sergio Mattarella will name a caretaker government and call early elections.

The talks were earlier halted when Five Star said it would not continue unless the PD "say yes to Conte".

"I am tired of playing games," Five Star party leader Luigi Di Maio had said. But he later welcomed what he referred to as the PD's willingness to accept Mr Conte's reappointment.

Head of the PD, Nicola Zingaretti, tweeted that while talks had been "positive", there needed to be "mutual listening" on both sides to make further progress.

image copyright Getty Images image caption The PD's Nicola Zingaretti: "We are working to give Italy a new turning point"

How did we get here?

The two parties have been in discussions since Mr Conte resigned as prime minister in dramatic fashion last week.

His decision came after Matteo Salvini, the leader of the nationalist League party, tabled a no-confidence motion against him.

Mr Salvini's League party had been in power with the anti-establishment Five Star Movement for 14 months when he effectively ended the coalition, saying he could no longer work with his partners.

Mr Conte, an independent law professor, remains as caretaker leader while talks to form a new government continue.

On his return to Italy from the G7 summit in France, he even received the endorsement of US President Donald Trump in a tweet.

What are the sticking points?

Aside from who would become prime minister, there are significant differences over policies:

On Five Star's key demand of a cut of 345 parliamentarians, the PD may only agree to this in conjunction with broader constitutional reform

The two parties are also expected to have differences over Italy's 2020 budget, which will have to comply with EU deficit rules. Italy is the third biggest economy in the eurozone but, at 132%, it has the second biggest debt in proportion to its output.

The centre left will seek the rollback of many of the League-sponsored immigration measures that brought about the closure of ports to migrants. Although they were pushed forward by Matteo Salvini, Five Star ultimately agreed to them.

If the two parties fail to reach agreement, autumn elections appear likely, with Mr Salvini's nationalists eyeing victory.

Why had Salvini had enough?

Following weeks of hostility between the two ruling parties, Mr Salvini called for a snap election earlier this month, saying that differences with his Five Star coalition partners could not be mended.

A failed attempt by Five Star to derail plans for a high-speed rail link showed that the coalition could no longer govern, the right wing leader said at the time.

However, addressing the Senate last week, Mr Conte said that Mr Salvini had been "looking for a pretext to return to the polls" since his party's success in European elections in May.

media caption Giuseppe Conte launched a bitter attack on Matteo Salvini (L) in August as Mr Salvini to his right and Mr Di Maio to his left

The League has soared ahead of Five Star in opinion polls, due mainly to Mr Salvini's stance against illegal immigration, but has fallen back slightly since pulling the plug on the coalition.

In the May elections, the League came top with 34% of the votes in Italy, whereas Five Star got about 17%.

Despite this, Mr Di Maio has said his party does not fear another election.