Published: Mon, May 28, 2018
Money | By Arnold Ball

Milan stocks rise after president vetoes eurosceptic minister

Milan stocks rise after president vetoes eurosceptic minister

European equities markets rose on Monday, led by the Milan FTSE MIB stock exchange, which jumped almost 2 per cent as investors backed Carlo Cottarelli, an economist formerly with the International Monetary Fund, to form a technocrat government.

Although the president's role is largely ceremonial, he enjoys powers such as appointing heads of government and the ability to dissolve parliament that have proven key with Italy seeing frequent political instability and numerous changes of government.

European stock markets and the euro breathed a sigh of relief Monday after Italy's president vetoed the nomination of a fiercely eurosceptic economy minister, averting a potential eurozone crisis, analysts said.

Italy's president has come under fire after he vetoed the proposed economy minister of what would have been Western Europe's first populist government, ushering in the likelihood of a new election within months. "If you want to discuss it, it should have been done openly and with a serious debate", which he noted hadn't been part of the electoral campaign.

The 81-year-old billionaire former prime minister released a statement on Sunday in which he praised Mattarella's efforts to "safeguard this country's families and businesses".

Mattarella enraged the 5-Stars and League by vetoing their choice for economy minister on Sunday night, throwing Italy into a new round of political uncertainty more than two months after an election created a hung parliament. In a bid to settle markets, he stressed that Italy's economy was growing, its public debt was "under control" and that he assured his government would prioritize "prudent" management of it. The 5Star and League leaders, Luigi Di Maio and Matteo Salvini, demanded that Mattarella call fresh elections, and Di Maio has called for the president's impeachment.

"I asked for that ministry an authoritative political figure from the coalition parties who was not seen as the supporter of a line that could provoke Italy's exit from the euro", he added.

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It had been feared that the populist coalition's proposals for a flat tax rate, allied to increased public spending, could a further explosion in see Italy's already soaring debt, breaking European Union rules.

The question is whether he'll be able to get parliamentary approval, since the League and M5S between them have a majority in both Italy's houses of parliament.

Both men have vowed to vote against a so-called technocratic or non-partisan government, if such a coalition comes to a confidence vote in parliament.

However, Salvini dismissed calls on Monday by 5-Star and a far-right ally, the Brothers of Italy, to chase Mattarella out of office.

Luigi Di Maio of the 5-Star Movement attends a news conference in Rome. Under that clause, parliament can seek to remove a president if a simple majority of lawmakers votes in favour.

The vote gave the centre-right alliance of the League, Mr Berlusconi's Forza Italia and a smaller party 37%, while the Five Star Movement took 32%.

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