Italy's PM Draghi resigns after failing to revive his coalition govt

Italy's Prime Minister Mario Draghi has resigned. According to media reports, he told President Sergio Mattarella that he was standing down after three parties in his government refused to back him in a confidence vote. The President asked him to remain as caretaker leader until early elections which are expected this autumn. Draghi tendered his resignation Thursday, paving the way for fresh elections and opening a new chapter of political uncertainty. It comes after Draghi was snubbed by coalition partners in a vote of confidence in the Senate Wednesday, effectively meaning the government had collapsed.

Despite managing to win the vote, the left-leaning Five Star Movement, one of the parties in the coalition government, said it wouldn’t take part. The ruling Lega party and the Forza Italia party also said they wouldn’t take part. That came after the Five Star Movement opposed a new decree aimed at lowering inflation and battling rising energy costs. Italy’s lawmakers held a confidence vote on the wide-ranging policy package, but Five Star boycotted the move, angering both Draghi and the right-wing parties in the coalition. Italy has one of the highest debt piles in Europe, is facing record inflation and its growth prospects are limited. This macroeconomic context becomes particularly challenging as the European Central Bank prepares to lift interest rates, which could hamper the economic performance of Italy going forward.