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Italy sees anti-establishment government sworn in after roiling global markets

Key Points
  • Little-known law professor Giuseppe Conte was sworn in as Italy's prime minister on Friday afternoon.
  • President Sergio Mattarella had approved a patched up bid from M5S and Lega on Thursday evening, just days after a bitter feud roiled global financial markets.
  • Italian stocks — which have been at the epicenter of the latest market turmoil — were up by 1.6 percent Friday afternoon.
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

A populist coalition government was sworn into power in Italy on Friday, ending months of political uncertainty in the euro zone's third-largest economy.

President Sergio Mattarella swore in Giuseppe Conte as prime minister of Western Europe's

first anti-establishment government whose aim is to cut taxes, boost welfare spending and overhaul European Union rules on budgets and immigration.

"Your appointment comes at a crucial time for Italy and the entire European Union," European Council President Donald Tusk said in a letter to Conte. "To overcome our common challenges, we need unity and solidarity more than ever."

Mattarella had approved a patched up bid from Italy's anti-establishment Five Star Movement (M5S) and right-wing Lega (League) party on Thursday evening, just days after a bitter feud roiled global financial markets.

"All the conditions have been fulfilled for a political, Five Star and Lega government," Luigi Di Maio of M5S and Matteo Salvini of Lega, both the leaders of their respective parties, said in a joint statement following several hours of talks in central Rome.

Only days ago, Mattarella refused to accept an initial bid from Italy's populist parties over concerns about an economy minister who had helped write a guide for withdrawing Italy from the euro zone. That move plunged the country back into crisis mode, amid fears a fresh election could be framed as a de facto referendum on Italy's role in Europe.

Extreme measures from Italian government-in-waiting might soften: Pro

However, on Thursday, M5S and Lega moved to revise their combined slate of ministers, reshuffling a controversial pick for economy minister to a somewhat less critical post.

The shake-up seemed to be enough to win approval from Italy's head of state, who preferred an elected administration to the stop-gap alternative he had in reserve.

Populist government to work with 'determination'

The coalition deal sees little-known law professor Conte become Italy's prime minister. Conte, who belongs to neither party and has not been elected, told reporters in a brief statement: "We will work with determination to improve the quality of life of all Italians."

Conte takes over from Paolo Gentiloni, who led a coalition cabinet for around two years.

M5S and Lega now face confidence votes from both chambers of parliament — where they share a majority.

Italy has been without a government since an election in early March resulted in a hung parliament. M5S and Lega formed an unlikely pact in the weeks that followed, promising a sweeping crackdown on illegal immigration.

Italian stocks — which have been at the epicenter of the latest market turmoil — rose 1.6 percent Friday afternoon.

- Reuters contributed to this report