Italy renews attempt to form a government to end turmoil

Giuseppe Conte is a lawyer by trade

Image Giuseppe Conte was expected to become Italian PM

The Italian national pride on display is a feature of every Republic Day, but it took on a particular significance this year after Italy on Friday ended three months of political and financial turmoil and swore in a government whose populist and euroskeptic leanings have alarmed Europe.

Stock markets in Italy and globally had plunged and Italian borrowing rates soared earlier in the week when it appeared the country was heading to new elections after President Sergio Mattarella vetoed the prospective partners' first choice for economy minister, collapsing the proposed coalition.

Just a short time earlier, President Sergio Mattarella's office announced that the new premier, University of Florence law professor Giuseppe Conte, and his ministers would be sworn in Friday afternoon.

The populist parties constituting the new government won the most votes in a March 4 election, promising a sweeping crackdown on the illegal immigration that helped fuel their ascent.

The continent's euroskeptic politicians cheered the birth of the new government coalition of the 5-Star Movement and the right-wing League party.

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.

Two of Italy's political parties have agreed to form another coalition government to avert a snap election.

"The initiative for a new anti-establishment government. would have to imply a credible pro-European commitment and a commitment to the Italian Constitution, i.e. the fiscal framework, to have any chance of flying", Codogno said.

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Though investors were relieved to avoid repeat elections, which they feared could have become a de facto referendum on the euro, they are now likely to refocus on the big spending plans of the League and 5-Star, which would add to its debts.

"Still, it is well possible that the near-term financial market reaction is positive, as (the) breakthrough reduced the uncertainty and at least provides Italy with a much-needed government", he said. "The truth is that they don't want us in government".

Italy's new nationalist deputy premier Matteo Salvini called Juncker "racist" after media reports that he had said Italians needed to work harder and be less corrupt.

Mr Conte, whom the president had tapped as premier-designate before former International Monetary Fund official Carlo Cottarelli, relinquished his mandate. French far-right leader Marine Le Pen tweeted: "Bravo to the coalition".

Following reassuring words about the Euro from the two populist party leaders, a compromise was reached: Savonna was named instead to head the ministry of European affairs and Giovanni Tria, in favor of the Euro, was named economic minister. Di Maio also backed down on threats to seek Mattarella's impeachment over the first failure.

Public resentment over what was perceived as fellow European Union nations' failure to help ease the financial and logistical burden on Italy in caring for the flood of migrants helped boost the League's popularity.

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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