While the Italian Prime Minister was not a friend of Brexit, his departure could set off a series of events that could expose UK taxpayers to £200 billion in losses. The Italian prime minister and former president of the European Central Bank (ECB) said he would resign on Thursday after the Five Star Movement, a party in his ruling coalition that did not support a confidence vote, collapsed. Italy again in political chaos.
He told his cabinet: “I will submit my resignation to the President of the Republic this evening.
“The coalition of national unity that supported this government no longer exists.”
The confidence vote had become a focal point for tensions within his government as the parties prepare to fight each other in a national election due in early 2023.
Former Italian Prime Minister Giuseppe Conte, leader of the 5 Stars, sparked a series of events that led Mr Draghi to say he would stop by deciding to boycott the confidence vote in the Italian parliament.
The former ECB chief had said he wouldn’t want to lead a government without the 5-Star, which emerged as the largest party in the previous elections in 2018 but has since suffered from defections and a loss of public support.
Later on Thursday evening, Italian President Sergio Mattarella rejected Mr draghis resigned and asked him to address parliament to get a clear picture of the political situation.
President Mattarella will either try to persuade Mr Draghi to form a new government, find a new interim leader to lead Italy into elections next year or call early elections.
But leading political pundits in Italy have pointed to the instability of the coalition backing Draghi.
Michela Morizzo, the CEO of the Italian polling agency Techne, said: “The governmental crisis in Italy was not a surprise to the country. The majority supporting the Draghi government came from a forced coalition between very different parties.
“The approaching next parliamentary elections have heightened tensions – reaching the breaking point when the Five Star Movement, a party in an identity crisis and consensus, began to slip.
“The Italian political system is currently embarking on an electoral path in a moment of political weakness and with the electoral geometries that have yet to be defined in terms of coalitions.
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“Added to all this is a very difficult economic context, with inflation spiraling out of control and an energy crisis threatening to push millions of people over the poverty line and many companies out of business.”
Italy has not had autumn elections since World War II, as that is normally the time when the budget is drawn up and approved by parliament.
Risks of a Draghi government collapse rippled through financial markets on Thursday, as Italian bond yields rose sharply, suggesting investors demanded a higher premium to hold their debt, and equities fell to their lowest level since late. 2020.
Italy, the third largest economy in the eurozone, is already going through difficult economic times, with borrowing costs skyrocketing as the ECB begins to tighten its monetary policy.
Disturbingly, as economist Bob Lyddon emphasized in a piece for Express.co.uk yesterday, UK faces £200bn losses if eurozone collapsesthe economy here threatens to plunge into chaos.
His departure also poses major problems for the EU at a time when the bloc is facing a deep energy crisis triggered by the Russian attack on Ukraine.
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Draghi would also leave at a time when Brussels lacks a strongly backed political figure, with French President Emmanuel Macron currently leading a minority government and German Chancellor Olaf Scholz still failing to convince EU citizens that he is a worthy replaces Angela Merkel.
The move also threatens to undermine efforts to secure billions of euros in European Union funds.
To make matters worse for the EU, snap elections could see the far-right leader of the Brothers of Italy, Giorgia Meloni, win the bulk of the vote, according to the latest polls.
Meloni, a staunch Eurosceptic, refused to vote for Draghi’s technocratic government, despite joining a right-wing coalition with Matteo Salvini’s government-backed Lega and Silvio Berlusconi’s Forza Italia parties.
On news of Mr Draghi’s resignation, Ms Meloni tweeted: “This parliamentary term is over. We will fight so that Italian citizens have the supreme right of all democracies: the freedom to choose who they want to represent.”