Published: Fri, June 08, 2018
Finance | By Loren Pratt

Italy's new populist government wins 2nd confidence vote

Italy's new populist government wins 2nd confidence vote

Conte was interrupted almost three-dozen times during his 75-minute speech to the Italian Senate ahead of a confidence vote on the new government later Tuesday.

Prime Minister Giuseppe Conte addressed the Senate, flanked by the leaders of two formerly fringe parties that had shoved aside mainstream parties at elections in March to form a coalition with Conte, a little-known law expert, as its head. It will then be fully empowered. Their presence has raised doubts about whether Conte, a political novice, can put his own stamp on the government's agenda.

During his speech, he made no mention of the country's commitment to remaining in the eurozone, an issue which has rattled financial markets, but he addressed the subject at the end of the parliamentary debate - in no uncertain terms.

"You're deceiving the good faith of Italians if you're trying to make us believe that it's enough just to list these things, without saying how you'll do it or how you'll convince Europe", said Sen. "However, its reduction must be pursued, but with a view to economic growth". A positive outcome there is even more assured because of in that chamber the strength of the Five-Star Movement and the League, the two parties that support his government.

Italian bonds extended losses as Premier Giuseppe Conte's maiden speech to Parliament reiterated that the new populist government will pursue a radical policy program.

"If populism means the ruling class listens to the needs of the people".

The League forged a coalition with anti-establishment Five Star Movement (M5S) on the base of a political platform including a crackdown on irregular migrants. In addition to their roles as deputy, Salvini is interior minister and Di Maio holds the economic development portfolio.

Touching on one of the most sensitive issues for markets, Conte said the euro zone's fiscal rules should be "aimed at helping citizens" and Italy would negotiate changes to European Union governance.

While confirming Italy's North Atlantic Treaty Organisation commitments, the new government's policy agenda calls for lifting European Union sanctions against Russian Federation as well as the opening of dialogue and partnerships, given Moscow's economic, commercial and strategic importance. Italy's 10-year government borrowing costs rose 18 basis points to 2.74% and two-year yields were up 17 bps at 0.99%.

Fears of a possible exit strategy were stoked when an early draft of the government's policy agenda leaked, showing plans to delineate rules to leave the euro and for the European Central Bank to cancel 250 million euros in debt.

Conte reaffirmed said that the new government's first action would be on social rights, while it would also seek to reduce public debt.

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