The former European Central Bank president said the conditions were no longer there for him to continue after the populist Five Star Movement refused to back his government in a crucial parliamentary vote. His resignation was quickly rejected by Italian President Sergio Mattarella, who asked Draghi to address parliament next week to gauge how much support his government would have. The rejection creates time for Italy’s political class to try to cobble together a compromise to prevent the country from being referred to early elections. But the day’s events raise growing doubts about the longevity of the broader coalition Draghi leads from early 2021. “The majority of national unity that had supported this government since its creation is no longer there,” Draghi said in a statement as he offered to step down. “Since my inaugural speech, I have always said that this executive will only proceed if there is a clear prospect of being able to deliver the government program in which the political forces have voted their confidence,” he said. “These conditions no longer exist.” Italian shares sold off on Thursday, with the FTSE index of shares in the country falling 3.4%. The yield on Italy’s 10-year government bond rose 0.11 percentage points to 3.24 percent, sending the spread with German 10-year yields higher as investors demand a rising premium to own Italian debt. The crisis was triggered when Five Star – the second largest party in parliament – boycotted a vote on Thursday on a 26 billion euro package aimed at protecting Italians from the effects of worsening inflation. Five Star leader Giuseppe Conte said he could no longer support Draghi’s government, which he accused of not doing enough to help families facing rising food and energy costs. “I have a strong fear that September will be a time when families will face the choice of paying the electricity bill or buying food,” Conte said after a party meeting on Wednesday. Five Star’s leader Giuseppe Conte © Massimo Percossi / EPA / Shutterstock Despite a boycott by Five Star lawmakers, the aid package passed the Italian Senate with a comfortable majority. However, Draghi has previously said he will only lead a government of national unity and will not continue without Five Star, which was the largest party in parliament until a split last month. The uncertainty comes at a sensitive time for Italy, which is expected to be the single largest recipient of the EU’s €750bn Covid-19 recovery fund. A snap election will cast doubt on Italy’s ability to pass its budget in the autumn and enact crucial reforms to accelerate the country’s long-term growth trajectory – on which EU money depends. EU Economy Commissioner Paolo Gentiloni told Italian media that Brussels was watching the political crisis “with anxious surprise”. Enrico Letta, leader of the center-left Democratic Party, said lawmakers now needed to come together to try to prevent Draghi from stepping down at a time of growing economic difficulties. “Now there are five days left to work for Parliament to confirm its faith in the Draghi government and for Draghi and Italy to get out of this dramatic mess as quickly as possible,” he tweeted. Draghi, who as ECB president was credited with saving the euro during the eurozone’s financial crisis a decade ago, last year asked Mattarella to become prime minister to lead the country still reeling from the pandemic.
