Italian Premier Conte Will Resign Tuesday to Plot a Comeback

Italian Prime Minister Giuseppe Conte will resign on Tuesday morning to avoid a damaging defeat in the Senate and maneuver for a return at the head of a new government.

Conte will preside over a cabinet meeting at 9 a.m. in Rome and then head to President Sergio Mattarella’s office to formally step down, according to a government statement.

The idea is that by preemptively offering his resignation to Mattarella, who oversees the formation of ruling coalitions, Conte will then be asked to take another shot at putting together a government, according to officials who asked not to be named discussing confidential deliberations. Mattarella will start meeting with parties on Wednesday afternoon to discuss who could be the next prime minister, an official said.

The Five Star Movement, the biggest force in the current parliament, and lawmakers of the center-left Democratic Party had both been urging the premier to resign after a junior ally ditched the alliance, officials said. After the resignation announcement, they reaffirmed their support for a new Conte cabinet. The trigger was a vote in the Senate later this week in which Conte probably wouldn’t have had a majority.

Italian Premier Conte Will Resign Tuesday to Plot a Comeback

Meanwhile, the Italian Treasury is starting to factor in a bigger hit to the country’s battered public finances this year as another extended lockdown holds back the recovery, a senior government official said.

Treasury models suggest the budget deficit may reach as much as 9.2% of output this year, the official said. The government is also looking at a deteriorating outlook for growth and could see the economy expand as little as 4.5% in a worst-case scenario, according to the official.

The prospect of spiraling borrowing and political instability in a country that’s already the European Union’s problem child is likely to prompt concern in Brussels and Frankfurt, where officials spent much of 2020 unlocking fiscal and monetary aid to help Italy and countries similarly crippled by the coronavirus pandemic.

Any government in power will also have to decide how to spend the EU’s recovery package and speed up the pace of vaccinations.

Conte’s Nemesis

After resisting pressure to quit following the defection earlier this month of the Italy Alive party led by former Premier Matteo Renzi, Conte appears to have concluded that resigning now and coming back to head a “unity government” is his best option, officials said. There is also the fact that Renzi and Conte have a long-standing dislike of each other and have been ill at ease in a coalition of mutual convenience.

A new Conte coalition might include centrists, unaffiliated lawmakers, Renzi’s Italy Alive party or some of its members, as well as lawmakers from Silvio Berlusconi’s center-right Forza Italia, the officials said.

While some of the premier’s allies have raised the prospect of early elections to resolve the impasse, coalition leaders still see this is an unlikely option, fearing that a vote would usher in the center-right opposition led by Matteo Salvini. Five Star in particular has plunged in the polls since coming first in 2018 and stands to suffer heavy losses if Mattarella decides a snap vote is unavoidable.

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