Italian Prime Minister Mario Draghi arrives for a press conference in Rome, Italy, on July 12, 2022.
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Mario Draghi said on Thursday that he would resign as Italian prime minister, after a political party of his ruling coalition in Rome refused to take part in a vote of confidence before that day.
“This evening I will present my resignation to the president of the republic,” Draghi told the cabinet, according to a statement translated by Reuters, which puts Italian politics back in a fragile state of affairs.
“The national unity coalition that supported this government no longer exists,” he said.
The Five Star Movement, one of the parties in the coalition government led by Draghi, opposed a new decree aimed at reducing inflation and fighting rising energy costs. Analysts, however, have argued that opposition to this political package is not so much ideological but the result of internal party disputes.
Italian lawmakers on Thursday held a vote of confidence on the broad political package. Five stars boycotted the vote even though Draghi had already threatened to resign if the party did not support it.
“The M5S movement was triggered largely by the unrest that prevailed within the sick party, rather than by significant political differences with the executive,” Wolfango Piccoli, co-chair of consulting firm Teneo, said in a note Thursday. .
Draghi has been in power since February 2021 and has led a multi-party government and technocrats with the aim of bringing stability to the nation of southern Europe, which is often surrounded by new rounds of political chaos.
Bond yields are rising
Draghi has consistently pushed for a reformist agenda and his work has softened previous concerns among investors regarding the stability of the Italian economy. But this new setback jeopardizes efforts to secure post-pandemic funds from the EU and also comes when Europe is working hard to eliminate Russian hydrocarbons.
Italy plans to hold new parliamentary elections before June 2023, but the latest uncertainty in Rome could put it ahead.
Draghi, despite having a majority in the Italian Parliament without the support of the Five Star Movement, has previously said he would not be available to lead another executive.
Italian bond yields rose during the session ahead of Draghi’s announcement and Italy’s FTSE MIB fell 3.3% at the close of the market, with a fall in bank shares.