Italian Prime Minister Giuseppe Conte is seen addressing senators.
ANDREAS SOLARO AFP | Getty Images
LONDON – Italy avoided further political chaos on Tuesday after Prime Minister Giuseppe Conte survived a vote of confidence in Parliament’s upper house.
The country had been embroiled in new political uncertainty over the past week after a smaller party withdrew its support for the coalition government, thus eliminating its majority in Parliament.
However, Italian lawmakers in the Senate supported Conte during a vote on Tuesday, by 156 to 140, which allowed him to continue in office. He also received the support of the lower house of Parliament in a vote on Monday evening. Conte will now lead a minority administration in a country prone to political disputes.
Italia Viva, the small political party established by former Prime Minister Matteo Renzi, left the coalition last week over differences over how to invest the next EU funds to boost the Italian economy.
Renzi has been accused of acting for his own political interest seeking to encourage public opinion of his newly formed group. His party abstained from the crucial vote Tuesday evening, instead of choosing to go against Conte and help overthrow the government.
One of the main challenges for the now minority government, apart from the rapid coronavirus pandemic, will be to rescue the Italian economy, where GDP (gross domestic product) is expected to fall by 10% by 2020.
The coalition formed by the Five Star Movement and the Democratic Party, two pro-EU parties, is due to present a recovery plan in Brussels in mid-February for approval.
Speaking on Monday evening, Paolo Gentiloni, European Commissioner for Economic Affairs and who will assess recovery plans, said “fiscal imbalances run the risk of deepening”.
The eurozone had worked to reduce government deficits and debt levels before the pandemic and there is concern that fiscal positions will be much worse after the pandemic, if the next stimulus is not well invested.
Lucky third time?
It is not the first time Conte has survived the internal divisions of his government. The former law professor with no political affiliation was the compromise candidate appointed prime minister in June 2018, when the Five Star Movement and the Lega anti-immigration party formed a coalition.
However, in the summer of 2019, Lega provoked a vote of no-confidence in the coalition government, but ended up being replaced in the administration by the Democratic Party, and what would then be Italia Viva.
Just over a year later, Conte remains in power but with his third government formation.
The bond market has shown some concerns over the past week, with the latest political dispute in Italy having generated slightly higher returns.
However, the market reaction has been somewhat contained due to the wider European context, where the European Central Bank continues to buy large amounts of public debt and the European Commission will soon distribute new funds.