The Italian count struggles to keep his strength after Junior Ally gave up

Italian Prime Minister Giuseppe Conte is fighting for power after a junior partner in his coalition stepped down, kidnapping a majority in parliament.

Former Prime Minister Matteo Renzi said on Wednesday night that ministers from his Italia Alive party would leave the cabinet, attacking Conte for not doing enough to address the country’s problems. Although the party is small, Conte relied on him to maintain his majority. Conte could call for a vote of confidence in parliament next week, newspapers including reported the Republic.

Renzi’s decision triggers a government crisis that could last for days or even weeks and has no clear solution in sight. Before making further moves, Conte will have to formally accept the resignations of Renzi’s two ministers.

However, Conte has several ways to stay in power or return later as prime minister:

• He could try to win a vote of confidence with the support of parties, both inside and outside the current government, and unaffiliated parliamentarians. That could mean relying on forces like Silvio Berlusconi’s Forza Italia party to keep the government in power. Conte agreed with President Sergio Mattarella to avoid a confidence-building measure until new aid and deficit legislation is adopted, he told Repubblica.
• He could resign, which would trigger a new round of talks between the parties. This could eventually lead to a new administration led by Conte.
• President Mattarella, whose ceremonial majority role also includes responsibilities for protecting political stability, could set up an interim administration to run the government until possible elections. A placeholder administration could give Conte time to organize a future election campaign.
• A broad alliance, which includes coalition parties and possibly center-right forces, could also try to forge a government under the guise of former European Central Bank President Mario Draghi.
• Fast elections, although a risk, seem to be only a distant possibility for the time being. It is said that the president – who has the authority to call a new ballot – would be reluctant to see the country voting during the pandemic. “A quick vote, the worst case scenario for investors, remains unlikely at this stage,” said Lorenzo Pregliasco, a political analyst at YouTrend.

Of Italy decade the yield increased by 1 basis point to 0.61%, with the difference to German debt extending to 113 basis points. Any drop in Italian bonds is an opportunity to enter the market, as quick elections are unlikely, given the “incentive” to manage the recovery of money from the European Union and the tight voting schedule. They stated Citigroup strategies led by Aman Bansal.

“Act of Courage”

Withdrawal at such a crucial time for the country is tantamount to “an act of courage,” Renzi told a news conference in Rome. Conte’s government has not done enough to solve problems from education to infrastructure, as well as the virus, the former prime minister said.

The timing of the crisis for Conte could hardly be worse, with Italy struggling with a worsening pandemic and recession. At a cabinet meeting on Thursday, Conte is set to sign a plan to widen the country’s deficit by about $ 24 billion ($ 29 billion), while his government has expanded its powers overnight. emergency to fight the pandemic by April 30.

Renzi has been putting pressure on Conte since the end of last year, hitting the prime minister’s plans to manage and spend EU bailouts. Renzi says the plan has been improved in line with its requirements, but insisted on additional conditions, including Italy reaching a line of credit for the European Stability Mechanism for health spending.

“The real problem is: should we spend more money on health with MES?” Renzi said following his announcement on Wednesday.

– With the assistance of Marco Bertacche, Neil Chatterjee and Samuel Dodge

(Bond updates in the sixth paragraph.)