Carlo Cottarelli to try to form Italian government

Mr Cottarelli, an economist, is a former International Monetary Fund official who firmly believes in the eurozone project and in the necessity for Italy to cut its high debts. Sacco said he wanted Italy to remain in the euro but that its concerns needed to be taken seriously by European Union partners.

Di Maio also called for holding the new parliamentary election after impeachment of Mattarella.

Mr. Salvini, who was Mr. Savona’s biggest advocate and a fellow eurosceptic, declared that Italy was not a “colony”, and that “we won’t have Germany tell us what to do”. “I am very angry”.

Marine Le Pen, the French National Front leader, said Mr Mattarella’s decision amounted to a “coup d’etat” while Steve Bannon, Donald Trump’s former strategist, called the last 48 hours of political events in Italy “disgusting”.

“Why don’t we just say that in this country it’s pointless that we vote, as the ratings agencies, financial lobbies decide the governments?” he asked in a video on Facebook.

Di Maio denounced the replacement of “a government with a majority with one that won’t obtain one” and called for the president to be impeached. Di Maio has also called for Mattarella’s impeachment.

Meanwhile a senator for Italy’s Eurosceptic League party has said Brexit offers an opportunity to forge closer ties with the UK. While nominally independent, he is associated with the centre-left Democratic Party, Italy’s ruling party until its defeat in the March election, which the populists accused of corruption, economic incompetence and being too accommodating to illegal migrants.

Italian Premier-designate Giuseppe Conte (C) is approached by journalists as he leaves his home, in Rome, May 24, 2018.

In his current role, Cottarelli has made frequent appearances in Italian media to evaluate the fiscal plans of the populist parties that had hoped to form a government together, the anti-establishment 5-Star Movement and the euroskeptic League.

The euro crawled off a 6-1/2-month low against the dollar on Monday, catching its breath after Italy´s president tried to allay investor worries about political unrest in the country, although the prospect of a near-term election capped gains.

Mattarella said he had vetoed the appointment of Savona as economy minister as it was his constitutional duty to protect Italy’s financial interests.

European stocks and the euro moved lower amid concern new elections in Italy might spark fresh debate about a break-up of the region’s single currency, while oil extended its slide amid signs OPEC and its partners are planning to lift production.

The alarm bells are ringing in Italy and it doesn’t look good for the Euro.

The most famous example of a president denying a PM’s choice came in 1994 when Eugenio Scalfari refused then prime minister Silvio Berlusconi’s choice of his own lawyer – Cesare Previti – as justice minister.

However, Italy’s president blocked the coalition’s choice of finance minister, creating further turmoil.

Mr Mattarella “didn’t give the centre-right the chance to form a government because we didn’t have the votes, and now Mr Cottarelli arrives without any votes?”

Cottarelli pledged that his government would uphold Italy’s “essential” role in both the European Union and in the eurozone.

The leaders of the two populist parties were furious over the Mattarella veto. “They should shut up”.

Investors were also anxious that the new government’s fiscal-expansion plans, including introducing a guaranteed income for the poorest Italians and a flat tax that would cut nearly everyone’s tax rates, would be unaffordable, putting the country on a collision course with the EU’s budget-deficit rules. “I think that about 80% would vote to get rid of the euro”. “Especially the League may frame a new election as a de facto referendum on Italy’s role in Europe”. As weeks passed without a government, Mattarella warned he would reluctantly appoint a nonpolitical Cabinet to take the country to fresh elections if a viable coalition could not be forged.