Draghi To Meet With President 1200CET, New Gov't Rests On 5-Star Support

Former ECB chief Mario Draghi is set to meet with President Sergio Mattarella at 1200CET (0600ET, 1100GMT) to discuss the potential of the central banker forming a new technocratic gov't after it became clear last night Prime Minister Giuseppe Conte would not be able to put together a majority coalition.

• Thetalks taking place to cobble together a parliamentary majority under Conte broke down last night after it became clear that former PM Matteo Renzi would not accept the 5-Star Movement (M5S) offer of more influence in Cabinet for his minor Italia Viva party, and would demand that Conte does not lead the next gov't.
• The main risk at present is that M5S does not uniformly support the installation of a technocratic Conte gov't. Last night a senior Cabinet minister, Secretary of the Council of Ministers Riccardo Fraccaro from M5S, stated that his party had been clear that it would only support a gov't led by Conte.
• However, many M5S lawmakers are likely to support a technocratic Draghi gov't. While they may lose their influence in gov't, many will want to avoid snap elections given the slump in support for their party recorded in recent months.
• As such, Draghi gov't may rely on a patchwork quilt of support from parties of the left, centre, and right.
• In the event a Draghi gov't comes to power, as in previous technocratic gov'ts, it would likely be made up of independents and non-partisan officials. The gov'ts work would be to deal with the pandemic and associated economic crisis by utilising EUR200m+ of EU COVID-19 recovery funds - a major source of contention within the Conte gov't.