Italian president has summoned Draghi

The Italian President Sergio Mattarella said on Tuesday he wanted to appoint a new government that he hoped would win broad support in parliament after talks aimed at reviving the previous coalition collapsed, Reuters reported.

”Mattarella, the supreme arbiter of Italian politics, said he did not want to call early elections, arguing that the country needed a strong administration to deal with the coronavirus pandemic and to draw up recovery plans for the economy.

As a result, he said he wanted a “high-profile” administration to take office that could rely on cross-party backing to tackle the health emergency. Such a government would almost certainly be led by a technocrat.”

Key comments

Says failure of govt mediation leaves just two alternatives, either a new govt or early elections.

Says elections would curb govt activities in a crucial moment for Italy.

Says hopes Italy presents plans for EU recovery fund as soon as possible.

Says caretaker govt could not draw up recovery fund plans.

Questions how elections could be carried out during covid pandemic.

Says wants to see a new government take office.

Says wants all parties in parliament to support it.

Market implications

Meanwhile, the Italian president has summoned the former European Central Bank President Mario Draghi as the head of state said he wanted to put together a new, “high profile” government.

”The back-to-back announcements meant Draghi would almost certainly be asked to lead a government of national unity to help Italy face the coronavirus emergency and manage the economic crisis,” Reuters reports. 

Italian government bond yields slipped on Monday on the news that he had been touted for PM.

Italian debt had recently taken a hit on worries over a potential new election but the market is more optimistic about the outcome of the government crisis in Italy and it is starting to price in the scenario of Draghi as prime minister.