Analysts at ANZ explained that populist leaders in Italy failed to form a government on the weekend, forcing the resignation of proposed Prime Minister Giuseppe Conte.
“President Sergio Mattarella vetoed his choice of finance minister, Paolo Savona, citing risks to the economy associated with appointing a euro-sceptic to the role. He has now asked former IMF economist Carlo Cottarelli to form a technocratic government, who has pledged to hold fresh general elections as early as August if his government does not gain the confidence of the lower house and Senate or in early 2019 if it wins that support.”
“Leaders of the populist Five Star Movement and League parties are now threatening impeachment of the President and it is clear that a bitter political divide and bickering is set to continue. In this environment, uncertainty and market turbulence look set to continue for some time yet.”