Europe News

Italy's populists' choice of PM is approved as Europe issues a warning over debt

Share
Key Points
  • Italy's head of state has given the country's populist parties' choice of prime minister — a law professor called Giuseppe Conte — the mandate to lead the government.
  • The approval came amid warnings from Europe for Italy to respect budget rules.
  • M5S and Lega are expected to reveal their choice of ministers soon.
Giuseppe Conte delivers a declaration after a meeting with Italian President Sergio Mattarella as part of consultations for a new government at the Quirinale Palace on May 23, 2018 in Rome, Italy.
Franco Origlia/Getty Images

Italy's head of state has given the country's populist parties' choice of prime minister — a law professor called Giuseppe Conte — the mandate to lead the government, amid warnings from Europe for Italy to respect budget rules.

Italy's anti-establishment parties, the 5 Star Movement (M5S) and Lega, proposed Conte as their candidate to lead a coalition government to President Sergio Mattarella on Monday.

There was a delay to Mattarella's approval, however, with the president holding talks with the speakers of Italy's lower house and Senate over the choice while question marks were raised over the accuracy of Conte's prestigious credentials.

On Wednesday evening, however, Mattarella had conceded the mandate with Conte accepting the position, telling reporters: "I am about to start defending the interests of Italians in all places, in a dialogue with European and international institutions. I am looking forward to start working for real."

The euroskeptic M5S and right-wing Lega party — which both earned the most amount of votes in an election in March — will now draw up a list of ministers to present to Mattarella. It's likely that Lega leader Matteo Salvini will become interior minister while M5S leader Luigi Di Maio could become minister for labor and/or economic development.

When starting their negotiations to form a coalition, both leaders had vetoed each other becoming prime minister, hence their choice of Conte — although both deny that he represents the type of technocratic leader they've both criticized in the past.

While Lega and M5S may be celebrating taking a step closer to government, officials in Europe are concerned not only about the parties' euroskeptic stance, but also with their plans for spending.

Last week, M5S and Lega revealed plans to boost public spending, cut taxes, dilute reforms to the pension system and for a guaranteed basic income. While the measures might appeal to voters, EU officials are keeping a close eye on Italy's adherence to deficit rules.

On Wednesday, the European Commission warned the incoming government that it should continue to cut Italy's public debt. The third largest euro zone economy had a debt-to-gross domestic product (GDP) ratio of 131.8 percent in 2017 and a budget deficit of 2.3 percent in the same year.

Salvini and Di Maio have both said previously that the EU's budget deficit limit of 3 percent was hurting economic growth and should be changed. The commission warned that debt, which is accrued when governments spend more than they receive in taxes, was still a major issue for Italy.

"Italy's public debt remains a major source of vulnerability for the economy," the Commission said in a report Wednesday, recommending economic policy for EU states that coincided with Conte's appointment.