Italy's political crisis is entering a new phase and fresh elections could determine both its EU membership and whether it remains within the single currency, according to analysts.
Voters in the euro zone's third-largest economy are likely to find themselves heading to the polls again, following the fall of populist Prime Minister designate Giuseppe Conte and the installation of International Monetary Fund (IMF) veteran Carlo Cottarelli as caretaker leader.
"Cottarelli will fail," Wolfango Piccoli, co-president of Teneo Intelligence, told CNBC's "The Rundown" Tuesday. "At this point, it's unclear whether any party will actually openly support his government in the confidence vote."
Conte gave up on an attempt to form a coalition government between the populist Five Star Movement (M5S) and Lega parties at the weekend, after pro-EU President Sergio Mattarella blocked his bid for Paolo Savona to serve as economy minister, saying that appointing a euroskeptic to the role would pose a threat to the Italian economy.
But Mattarella's push for a presidency-sponsored "neutral" government could be short lived, and Cottarelli — nicknamed "Mr. Scissors" for his pro-austerity stance — may prove to be just as destabilizing.