Salvini warns on Italy power

Italy’s deputy prime minister Matteo Salvini has told his party he wants to keep its fractious coalition government going, but is ready to see it collapse if he cannot push through his flat tax plans and other priority measures.

Salvini warns on Italy power

Italy’s deputy prime minister Matteo Salvini has told his party he wants to keep its fractious coalition government going, but is ready to see it collapse if he cannot push through his flat tax plans and other priority measures.

Two people present at a closed-door meeting in Rome said that Mr Salvini told lawmakers from the rightist League that his alliance with the anti-establishment Five Star Movement could last another four years or it could be over within three months.

Mr Salvini has the upper hand in the coalition following the League’s victory in Sunday’s European elections.

The pact depends on his coalition partners agreeing to League policy demands, Mr Salvini insisted, and on Five Star leader Luigi Di Maio keeping internal dissent in check following his disastrous result on Sunday, according to the sources.

Five Star members are voting online on whether to confirm Mr Di Maio as their leader.

Mr Salvini told reporters that either Five Star is committed to implementing the government programme — and the part related to infrastructure in particular — or the ruling coalition can’t last.

However, he also said he doesn’t see the possibility of early elections in September, saying “in September, we prepare a budget,” Ansa news agency reported.

The spread between benchmark Italian 10-year debt and similar-maturity German paper tightened 1 basis point to 281 points.

Italy’s 10-year yield fell one basis point to 2.64%.

Five Star leader Luigi Di Maio

Five Star leader Luigi Di Maio

Mr Di Maio saw his party’s support halved in the European ballot compared with the 32% he scored in winning last year’s general election.

The result left the Five Star leader fighting for survival and called the viability of the coalition into question.

The alliance is creaking just as the European Commission starts to up the pressure over Italy’s increasing debt load.

The commission is heading down a disciplinary track that could end in financial penalties, setting Rome and Brussels on course for a rerun of the budget clash that roiled markets last year.

Early elections could also disrupt the budget process.

Spending plans have to be submitted to both the commission and the Italian parliament in October and lawmakers have to back the bill by year-end.

If a government crisis prompts President Sergio Mattarella to dissolve parliament in mid-July, elections could be held in late September.

Any protracted talks on forming a government would eat into the time available for the budget.

Bloomberg

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