Italy's Populists Agree on a Premier Amid French Warning on Euro

 21 May 2018 - 0:39

Italy's Populists Agree on a Premier Amid French Warning on Euro

By John Follain & Marco Bertacche I Bloomberg

Italy’s anti-immigration League head Matteo Salvini said he’s reached a deal on forming a populist government and rebuffed a French warning to avoid putting the euro area’s stability at risk.

Salvini told reporters he and Luigi Di Maio, head of the anti-establishment Five Star party, agreed on nominees for prime minister and cabinet posts on Sunday. While saying neither he nor Di Maio would be premier, Salvini withheld names and said the list includes "unexpected” nominees. He said the leaders will present the proposal to President Sergio Mattarella on Monday, ANSA news agency reported.

The endgame follows a week of turmoil in Italian bonds and stocks triggered by reports about the coalition’s spending plans and rejection of European Union budget rules. The 10-year yield spread over German bonds ended Friday at 165 basis points, the most since October, prompting a word of caution from Paris.

"If the new government took the risk of not respecting its commitments on debt, the deficit and the cleanup of banks, the financial stability of the entire euro zone will be threatened,” French Finance Minister Bruno Le Maire said Sunday in an interview with Europe 1 radio.

Salvini fired back on Twitter, suggesting the warning was "unacceptable” interference. "Italians first!” he said.

Giuseppe Conte, a law professor at Florence University, is the most likely candidate for the prime minister’s post, while Salvatore Rossi, the Bank of Italy’s director general, could be picked as finance minister, Il Messaggero newspaper reported Saturday, without saying how it got the information.

The League gave Italians a say on the draft coalition platform this weekend at party-organized events across the nation, though it boiled down the 58-page agenda to just one page and 10 key areas, omitting the anti-establishment Five Star’s top policy plank: a minimum income for poorer citizens.

Five Star supporters backed the coalition pact by a 94 percent majority on Friday in an online ballot organized by the party.

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While Five Star emerged as the biggest single party in the general election on March 4, the League was part of a center-right alliance that won the most seats overall. Both leaders claimed the right to head the next government -- a dispute that’s dogged their effort to form a coalition ever since.

The League’s description of the program includes scrapping a pension reform that raised the retirement age, blocking immigrants arriving on Italy’s coasts and a flat tax for families and companies. There’s no mention of a "citizen’s income” for the poor at 780 euros ($920) a month, a flagship Five Star promise that the League denounced as a handout during the election campaign.