Eurozone rocked as Italy’s technocrats lose their grip on power

The latest twist of political fate in Italy has ignited an unusually contentious blaze at the heart of the eurozone nation.

Mario Draghi, who became Prime Minister in 2021, wanted to let Rome’s authorities build a new waste incinerator as part of a package of new spending measures. His plan was fiercely opposed by Five Star, a party founded by a comedian and an important part of the coalition which backs the technocratic Government. 

On Thursday, Five Star refused to back the former president of the European Central Bank in a confidence vote in Parliament, demanding more environmentally friendly policies — as well as cash to help with the cost of living. On the other side of the coalition is Lega, a more right-wing party led by Matteo Salvini who has grumbled Draghi has slipped too far to the left.

The PM won the confidence vote, but handed in his resignation to President Sergio Mattarella after losing Five Star’s backing. Mattarella rejected Draghi’s resignation attempt on Thursday evening and asked him to address parliament to gauge the political situation.  

Amid the instability, Italy faces losing a leader who is highly respected in financial markets at a critical moment — interest rates are rising and Italy needs the support of lenders to keep on financing its teetering mountain of debt.

It marks a dangerous moment for Italy and its economy, and threatens to rock the wider eurozone.