Italian PM resigns as government coalition collapses

Italian Prime Minister Mario Draghi has resigned after populist coalition partner Five Star snubbed a crucial confidence vote.

"I will hand my resignation to the president of the republic this evening," he said.

The announcement was made on Thursday, after Five Star leader Giuseppe Conte refused to back the Italian government's €23 billion package of economic aid for families and businesses, arguing Mr Draghi was not doing enough to tackle the cost-of-living crisis.

The bill also included a provision allowing Rome authorities to build a huge incinerator for the Italian capital’s rubbish, a project that M5S has always opposed.

Despite winning the parliamentary vote on Thursday, Draghi had warned that without the Five Star party’s vote, government would not continue.

"Today's votes in Parliament are very significant from a political point of view. The national unity majority that supported this government since its creation no longer exists," he said.

Right up to the senate vote, attempts were made to reconcile the two parties, with Milan’s stock market tumbling by 3% in light of the uncertainty among investors.  

Elections in Italy were due in early 2023, but Draghi’s resignation is expected to see the election brought forward to Autumn.

Five Star leader Conte, had been threatening to pull the party from the coalition for weeks. Draghi, former European Central Bank chief, was appointed to head a unity government in February 2021, with the main goal to lead Italy out of the coronavirus pandemic and revive its economy.