With no end in sight for the formation of a stable government, Italians again face the prospect of elections as three months of attempts to form a coalition government look set to break down.                   

President Sergio Mattarella’s veto of 81-year-old eurosceptic Paolo Savona as economy minister at the weekend tipped the country back towards elections and triggered a dramatic speculative attack on Italian financial markets.

Whatever the near-term outcome, markets are likely to remain depressed as uncertainty from the Italian political scene spreads.  The two anti-establishment parties, the 5-Star Movement and League, now appear to have abandoned plans to take a seat in any coalition.  

“New possibilities have emerged for the birth of a political government.. These circumstances, also considering the market tensions, have caused me to wait for further developments,” Cottarelli told ANSA news agency.

The parties are now reportedly seeking “a point of compromise on another name” for the economy ministry, but the sense that any resolution might be at hand is slowly fading.

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