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Italy PM faces confidence vote as Salvini calls time on coalition

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Italy’s ruling League party tabled a motion of no confidence in Prime Minister Giuseppe Conte on Friday, after its leader Matteo Salvini called time on Italy’s governing coalition.

The alliance between Mr Salvini’s rightwing League party and the anti-establishment Five Star movement is close to collapse after Mr Salvini demanded new elections on Thursday.

Late on Thursday after a day of high drama, Mr Conte initiated a recall of parliament from its summer break; but MPs and senators may not reconvene until the week of August 19, after the traditional Ferragosto public holiday.

The League leader and Italian deputy prime minister unofficially kicked off his electoral campaign on a beach in the southern region of Molise on Friday, as his party filed the motion of no-confidence at the Italian Senate in Rome.

Mr Salvini met supporters at the beach club of Cala Sveva di Termoli on Friday, one of six beach town campaign stops scheduled for over the next two days as he takes the fight to the voters.

The party said in a statement: “Too many ‘nos’ are bad for Italy which needs to grow and therefore to vote quickly. Whoever wastes time is harming the country and thinking only of their [parliamentary] seat.”

Italian markets came under pressure as investors reacted to the prospect of renewed political volatility — two-year government bond yields rose 23 basis points to 0.286 per cent, while the yield on 10-year debt was 25bp higher at 1.776 per cent.

The closely watched spread between Italian 10-year government bonds and German Bunds of the same maturity rose to as much as 2.367 percentage points, its highest level since June, suggesting that the risk premium investors place on Italian debt has risen.

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The relationship between the two governing parties has become increasingly tense in recent weeks as they clashed over a series of policies including greater autonomy for the regions, justice reforms, motorway concessions and plans to boost public spending.

Thursday’s row was precipitated after Five Star voted against legislation for a high speed rail line to France this week, a project backed by the League.

The League is well ahead in the polls with between 36 per cent and 38 per cent of the vote, ahead of the Democratic Party on 20-22 per cent. Mr Salvini has been under severe pressure from his MPs and aides to call an early election in an effort to capitalise on the League’s poll lead.

Via Financial Times

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