Italy is facing too many problems. Mario Draghi’s resignation has triggered protests across the country. There has been a COVID spike and the government needs to be strong. Many Italians are worried that without Draghi, policy will be weak and unclear. However, some parties want Draghi back and want the country’s economy to return to normal.
A vote of confidence in the government has been called, but it is unclear how long it will take to reshuffle the political landscape. Mario Draghi was snubbed by his coalition partners. During a recent Senate vote, three of his coalition partners refused to back him. Draghi resigned a second time, and President Sergio Mattarella has dissolved Parliament. In the meantime, new parliamentary elections will be held in late September or early October.
A coalition boycott of the vote of confidence in Draghi’s government signals the start of early elections. Mario Draghi had offered to step down last week, but his allies turned down the offer. The Italian government has been in a political crisis since July 14. In addition to the coalition boycott, the Five Star Movement resigned its support to the Draghi coalition government. This has led to Italy being forced to move to a caretaker government, with a new government expected to come into power in the first half of 2022.
With the new ECB chief in place, Italy will face many challenges. Unfinished reforms and rising interest rates will be difficult to deal with. The ECB recently hiked its key interest rate for the first time in a decade. Rising interest rates will increase Italy’s burden of debt, which is now 150% of its annual GDP. The country will have to pay the money more and will slow the entire eurozone economy.
Meanwhile, the Five Star Movement has pulled out of the coalition after refusing to support a bill aimed at helping Italians deal with rising energy costs. In the end, the five-stars did not vote for Draghi’s government and instead voted for a government led by Matteo Salvini. Even Silvio Berlusconi’s Party, Forza Italia, has two ministers quit as a result.
The crisis will likely drag Italy into political turmoil in the months to come. Italy’s government must first pass a national budget and reforms to keep the economy on track. The Italian economy has been one of the weakest parts of the European financial architecture and Draghi’s resignation could be a huge setback. In addition to the turmoil, Italy will be unable to access billions of euros from the Covid-19 fund and will face an economic recession.
While it’s clear that Italy needs a new government, it’s unclear how long the current administration will stay in power. Draghi’s resignation is a defining moment in Italian politics, as it marks the end of the 67th government since the modern Italian republic was founded after World War II. If Italy’s political situation continues to worsen, Draghi’s resignation will have an even more dramatic impact on the future of the country.