A new Italian government was put on hold on Monday after the leader of anti-establishment Five Star Movement asked President Sergio Mattarella for a few more days to form a coalition with the far-right League.
With hard decisions to be taken, the League revived some of its campaign rhetoric, taking aim at European Union budget restraints which impose de facto limits on how much a government can spend to kick-start its economy.
"There is no time to lose, there is no space for technocrat government", League leader Matteo Salvini said in a statement. While the two parties specified they had removed the section on possibly opting out of the euro, they made no mention about the suggestion the European Central Bank should write off this debt.
A draft of their proposed German-style coalition contract - dated Monday morning - featured a proposal for "specific technical procedures" that would allow countries to leave the single currency and recover "monetary sovereignty". This was partly out of a belief that while they would push Brussels to relax fiscal rules - not unlike Italian governments of the past, and other European Union governments such as France and Spain - they would not seek to pull their country out of the single currency. "We'll have a government that is supported by the majority of Italian parliament".
In upbeat comments that contained few of the cautionary notes he had used in recent days, Salvini said the 5-Star and League coalition would set a precise timeline for its reforms in issues including taxation, pensions and education. Prime Minister Silvio Berlusconi was toppled in 2011 as a former European Union commissioner and economics professor Mario Monti was installed as his "technocratic" replacement after the Union decided the country had not been run to their satisfaction. It's hard to see how any respected figure could endorse such a programme.
Fresh elections in the autumn would probably be nearly inevitable if this latest attempt to form a government fails. But with the outgoing ruling Democratic party still weak, a new vote would yield more of the same. Italy's showdown with Europe would only be delayed.
Reuters Breakingviews is the world's leading source of agenda-setting financial insight.
The FTSE MIB index - Italy's benchmark stock index - slumped 1.8% to 23,865.72 (http://www.marketwatch.com/story/european-stocks-seesaw-as-north-korea-risks-return-2018-05-16), heading for its biggest daily drop since March 22, according to FactSet data. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
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