Italy’s Conte set to unveil new cabinet
Italy’s incoming Prime Minister Giuseppe Conte was expected Wednesday to present a new government of the anti-establishment Five Star Movement and former centre-left foes after nearly a month of crisis.
Conte is set to see President Sergio Mattarella and unveil his new cabinet before the ministers are sworn in, bringing to an end a period of political turmoil sparked last month by the collapse of the country’s populist coalition.
Luigi di Maio, head of the Five Star Movement (M5S), is tipped to be Italy’s next foreign minister, while Roberto Gualtieri from the centre-left Democratic Party (PD) is the frontrunner for the finance post in the eurozone’s third-largest economy.
Gualtieri, who has chaired the European Parliament’s committee on economic and monetary affairs for the past five years, will have to move fast to deal with Italy’s most pressing issue — the upcoming budget.
The M5S and PD have agreed to put aside their differences to prevent the country from heading to the polls after strongman Matteo Salvini pulled his far-right League from the government last month while MPs were at the beach.
The new coalition will have to be voted on in the lower and upper house of parliament, possibly by the end of the week, to ensure it has a majority. The small, left-wing Free and Equals party is expected to offer its support.
Conte — who had been a compromise prime minister for the League-M5S coalition — will continue in the top job.
Italian markets have welcomed the incoming government, with Milan’s FTSE Mib up nearly 1.7 percent Wednesday.
The spread between Italy’s bond yields and those of rock-solid Germany also narrowed to 146 from 158, indicating investor confidence over the political outlook.
But the road to a deal has been rocky, with bickering over posts and the government programme, and political observers have warned the nascent coalition may not last until the end of the legislature in 2023.
The country has a form for rapid political turnover: Conte’s new government will be the 67th in Italy in just 73 years.
“Governing will be trickier than agreeing on a coalition,” Berenberg economist Florian Hense said in a note.
“The upstart Five Stars have been the bane of the established PD for the past six years. Conte’s ability to broker compromises between the parties will be even more crucial than it was for his previous coalition,” he said.
The incoming government’s first challenge will be submitting the 2020 budget to parliament by the end of September, and then to Brussels by October 15.
It will need to find over 20 billion euros ($22 billion) in savings to comply with EU rules and avoid a rise in VAT which would hit the country’s poorest the hardest and could see debt-laden Italy slide back into recession.
The outgoing government quarrelled bitterly with the European Commission over its big-spending plans, but analysts said the new M5S-PD tie-up was expected to strike a more conciliatory tone and may, therefore, win some flexibility.
Hense damned the new team with faint praise, saying it was “unlikely to implement the serious pro-growth structural reforms that Italy needs in the long run. But it probably will not make the situation worse.”
The other hot-button issue is immigration, a highly-charged subject which became Salvini’s obsession as interior minister, with his hardline approach to charity rescue vessels sending his popularity soaring but horrifying his critics.
Conte is reported to want to keep the interior minister post for someone not affiliated to either political party, with the frontrunner for the job tipped to be Luciana Lamorgese, a former Milan prefect who also has experience as interior minister’s cabinet chief.