(RoyalPatriot.com )- After his unity government collapsed, throwing the nation into political upheaval and disrupting the financial markets, Italian Prime Minister Mario Draghi submitted his resignation to President Sergio Mattarella on Thursday.
The president of state “took notice” of the resignation, according to a statement from Mattarella’s office, and urged Draghi to continue in a caretaker role.
What Mattarella will do next was not stated in the statement. This week, political insiders predicted that he would dissolve parliament and call for early elections in October.
On Thursday afternoon, Mattarella intends to meet with the speakers of the legislature’s two chambers.
On Wednesday, three of Draghi’s key allies refused to participate in a vote of confidence he had scheduled to mend fences and revive their fractured coalition, which led to the collapse of Italy’s government.
The political turmoil has undone months of calm in Italy, during which time respected former central banker Draghi helped formulate Europe’s strong reaction to Russia’s invasion of Ukraine and improved the nation’s position in financial markets.
Italian bonds and equities experienced a steep decline on Thursday as markets prepared for the European Central Bank’s first interest rate increase since 2011.
Italian equities began down by 1.8 percent as benchmark 10-year bond rates in early trade jumped over 20 basis points to their highest level in over three weeks.
Lorenzo Codogno, president of LC Macro Advisors and a former top Italian Treasury official, stated, “It is a major blow to Italy’s capacity to achieve policies and changes over the short future.” Early elections will cause delays and disruptions, and there won’t probably be a budget by year’s end.
Draghi had already submitted his resignation last week after one of his allies, the populist 5-Star Movement, declined to support him in a confidence vote on policies addressing the rising cost of living.
Mattarella rejected the resignation and instructed him to go before the assembly to see whether he could maintain the broad coalition until the anticipated end of the legislative session in early 2023.
In an address to the Senate, Draghi urged cooperation and outlined a number of problems confronting Italy, including the conflict in Ukraine, social injustice, and growing costs.
However, the 5-Star once more chose not to support him, claiming that he had not addressed their main issues.
The right-wing Forza Italia and League parties also decided to abstain from the vote, stating that they required Draghi’s pledge to form a new administration free of the 5-Star and with new policy agendas.
According to polls, the conservative coalition, which includes the Brothers of Italy party on the right, would probably prevail in a vote.
