Published: Wed, May 16, 2018
Global News | By Blake Casey

Italy debt cancellation not in government programme - League economy spokesman

Italy debt cancellation not in government programme - League economy spokesman

Italy's two largest parties, the far-right League and anti-establishment 5-Star Movement, both appeared to reject a call by President Sergio Mattarella to form a "neutral government", saying early elections were preferable.

Italy has been stuck in a political deadlock since the general election on March 4 produced an inconclusive result. The programme confirms they want to hand out more welfare - possibly using European Union funds - cut taxes and lower Italy's retirement age.

"We don't want to be in a government that is similar to the ones we had over the past five years", said the League's Gian Marco Centinaio, one of Salvini's closest advisors. Most controversial of all, the draft calls into question the irreversibility of the single currency by suggesting a mechanism to allow member states to leave if voters demand it.

European Commission President Jean-Claude Juncker and German Foreign Minister Heiko Maas agreed on Friday to use the already available options to circumvent the required EU member states' unanimity when it comes to addressing foreign challenges including the Syrian war.

Italy debt cancellation not in government programme - League economy spokesman

The shock manifesto, entitled Government for Change, reveals plans for Italy to leave the single currency, calls for sanctions against Russian Federation to be scrapped and reveals plans to ask the European Central Bank to write off the country's £250bn debt. "We'll have a government that is supported by the majority of Italian parliament".

Matteo Salvini, leader of the anti-mass migration populist Lega, and Luigi Di Maio, leader of the anti-establishment populist Five Star Alliance, have been locked in round after round of talks about forming a new government which has been claimed would be a nightmare scenario for the European Union - but negotiations appear to have stalled. But it's hard to believe the rapid change of heart is genuine, since the document is dated May 14. But Italy's 150 basis point premium over Germany's long-term debt is still below a crisis peak of over 5 percent in 2011.

As of Wednesday morning, officials involved in the talks insisted that Five Star and the League were finally close to a deal, though it was still unclear whether the two sides had settled on a choice for prime minister. It's hard to see how any respected figure could endorse such a programme. "It would very much put the new government on a Syriza-like trajectory within Europe", Mr Codogno wrote, referring to the leftwing ruling party in Greece.

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. This is the biggest one-day rise since July 2017, Reuters data shows. All opinions expressed are those of the authors.

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