Giuseppe Conte addresses journalists after a meeting with Italy's President Sergio Mattarella on May 27, 2018 in Rome | Vincenzo Pinto/AFP via Getty Images Italy’s president scotches populist governing alliance A ‘technocratic’ premier may try to govern but early elections are likelier outcome.

ROME — Italy's messy post-election drama on Sunday night took another stunning turn.

The country's president rejected a proposed populist 5Star-League alliance that included a Euroskeptic as economy minister and looked poised to appoint a "technocratic" government as early as Monday.

The collapse of the proposed coalition leaves Italy on an uncertain path in the days ahead, veering between the possibility of early elections or a technocratic government of longer duration. It also threatens a constitutional crisis, as the leaders of the 5Stars Movement and the League condemned the president and one even called for his impeachment. And it’s sure to further rattle already nervous international financial markets.

'Bad day for Italy'

The coalition unraveled after President Sergio Mattarella refused to accept 81-year-old economist Paolo Savona, citing his opposition to the single currency. The move wasn't wholly unprecedented: Previous presidents had used their powers to refuse to appoint a minister, though never because of their views on the euro.

After both parties refused to switch Savona out, the prime minister-designate — a little-known lawyer called Giuseppe Conte — on Sunday rejected the mandate to form a new government. The president can now call early elections or appoint a technocratic, or "presidential," government to lead Italy until the next election.

Mattarella has summoned former International Monetary Fund official Carlo Cottarelli to appear at the presidential palace on Monday morning, suggesting that he is leaning toward appointing a technocratic government.

Italy's parliament must sign off on any new government, and that's going to be a tough bar to clear. Even though the two main opposition parties -- Silvio Berlusconi's Forza Italia and the center-left Democratic Party -- have already said they would support a government sponsored by Mattarella, they alone don't have enough votes. If Cottarelli or any other presidential appointee fails to secure parliament's support, elections will be held in coming months. If they get the support, new elections will likely take place no sooner than next year — but this looks to be the less likely outcome.

The 5Stars and League have indicated they would prefer early elections, which pollsters expect they would do even better in than in March, when they sidelined the legacy mainstream parties. The populist parties trained their rhetorical guns on the president, the establishment and foreign powers -- the markets and Germany -- in the wake of the coalition's collapse, in a taste of the politics to come.

"This is a very bad day for Italy and for democracy," League leader Matteo Salvini told a rally of supporters on Sunday night. "Who said 'no' to this government were the lords of the spread, of Germany and France," referring to the spreads between Italian and other European debt that had been widening at the prospect of a 5Star-League government.

The 5Stars called for an impeachment procedure against the president for having "betrayed" the Italian citizens.

"This is an unprecedented political and institutional clash, which pits the president on one side and the populist parties on the other," said Massimiliano Panarari, politics and communication professor at Rome's LUISS university.

Euro 'fundamental' for Italy

Mattarella appeared at the presidential Quirinale Palace to tell reporters he had accepted all of Conte's choices for his Cabinet "except for the economy minister." He described it as a sensitive post that sends "signals of confidence or alarm" to financial markets, with real consequences for Italy's public debt and the economy.

“Membership of the euro is a fundamental choice for the future of our country and our young people," said the president, adding that since euro membership had not been part of the election campaign, it could not be questioned by the appointment of a Cabinet minister without holding a proper public debate. Mattarella has been outspoken on the importance of the euro to Italy since the election.

The two upstart parties refused to bend on Savona -- and used his rejection to score points against Brussels and international markets, their frequent targets during the election campaign.

Salvini, the League leader who had been expected to become interior minister in an alliance government — where he could implement the League's hard-line policy ideas on immigration — on Sunday said that, "if I am going into government, I am taking Professor Savona with me."

"New elections? Mattarella will decide that, since he decided everything," he added.

Savona had attempted to allay concerns about his Euroskeptic views in his first public statements since being nominated on Sunday, but it was apparently too little to convince the president.

Salvini, speaking at a rally in Terni, suggested the Italian president was ceding to pressure from other eurozone capitals worried about the jitters in financial markets over the prospect of a Cabinet that includes Savona. "If the government is going to be conditioned by threats from Europe, then the League won't be part of this government," said Salvini. “Either the government gets off the ground and starts working in the coming hours, or we might as well go back to elections.”

Luigi Di Maio, leader of the 5Star Movement — which emerged as the biggest single party in March's election, but behind a right-wing alliance of the League and Berlusconi's Forza Italia — said on Facebook on Sunday evening: In Italy “you can be a criminal convicted for fiscal fraud ... but if you have criticized the euro and Europe you can’t be a minister.”

Cottarelli, the former IMF official, has been mentioned by several parties and in the Italian media as a possible "neutral" premier, able to lead a "government of the president." He had been tasked by the previous center-left government under Matteo Renzi with helping to cut public spending and proposed ways to save money.

Jacopo Barigazzi and Stephen Brown contributed reporting.