Markets fall on fears that Italy could leave euro

Markets fall on fears that Italy could leave euro

Markets fall on fears that Italy could leave euro

Populists took power in Italy for the first time Friday with the swearing-in of a new government fusing in a coalition a political movement that delights in pillorying the establishment and a party whose anti-migrant, euro-skeptic politics have seen it soar in popularity.

Though the new prime minister, Giuseppe Conte - a political novice - is prime minister, his power will be checked by his deputies, the leaders of the two largest parties that emerged from the inconclusive March 4 ballot.

The upshot is that while Cottarelli's technocratic government team is ready, he and Mattarella are allowing more time for the populist parties to seek an agreement, the official said.

Carlo Cottarelli, a former International Monetary Fund official, was tipped as premier of a non-political government of technocrats after an attempt by two populist parties to form a government foundered.

Italian financial markets jumped on the announcement of the first populist government for an European Union founding member, formed by the anti-establishment Five Star Movement and nationalist League.

The 53-year-old was sworn in along with his cabinet, which will place M5S leader Luigi Di Maio and League chief Matteo Salvini in key ministerial posts.

Salvini canceled his scheduled appointments in northern Italy to fly to Rome and was expected to have a private meeting with Di Maio, a political source said.

The proposed populist government collapsed after president Sergio Mattarella vetoed the nomination of a finance minister who was backed by the majority of lawmakers.

The leaders of the anti-establishment 5-Star Movement and the right-wing League announced a deal aimed at overcoming the president's objections.

Overall, the new cabinet comprised 18 ministers.

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"It's the celebration for all of us, of our republic", he said.

Global financial markets have been recovering over the past two days after tumbling on the spectre of repeat elections dominated by debate over Italy's future in the euro zone.

The president approved Conte and a rejiggered Cabinet list Thursday after Paolo Savona was moved from the economy slot to that of the ministry of European affairs.

Salvini has long wanted his new post, from where he will aim to stop "the business" of migration, cracking down on people smuggling networks and speed up expulsions of illegal immigrants in a country on the front line of Europe's migrant crisis.

Mattarella then asked pro-austerity economist Carlo Cottarelli to form a caretaker government.

The new government delighted leaders of an increasingly bolder far-right in European politics.

There were even calls for Mattarella's impeachment earlier in the week from the M5S, but the party's leader has now said that option is off the table.

But there are also reports a snap election might be called, or that two populist parties could try again to form an administration.

Its ambitious economic proposals - which include a monthly basic income for Italy's poorest and a two tier "flat" tax - have anxious Brussels and financial markets given Italy's massive 2.3 trillion euro ($2.7 trillion) debt.

Mr Salvini has said he would "seriously consider" an offer on Wednesday from Mr Di Maio to resurrect their bid to govern together.

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