Eurozone faces day of reckoning as panicking EU BEGS Italy's Draghi to stay: 'We need you'

Italy: Mario Draghi to offer resignation

The Italian Prime Minister will address the upper house Senate on Wednesday on a political crisis that could bring down his government and trigger early elections at a time of international tumult and economic upset. Mr Draghi tendered his resignation last week after the populist 5-Star Movement refused to back his broad coalition in a parliamentary confidence vote.

President Sergio Mattarella rejected the resignation and instead asked him to address parliament, hoping he would find a solution allowing him to stay in office until the end of the legislature in early 2023.

Senators have been summoned for 9.30am (8.30am GMT+1) and the result of a vote on the prime minister’s speech is expected by 7.30pm (6.30pm GMT+1).

Speaking in the upper house of parliament, Mr Draghi renewed his intentions to resign should he fail to receive once again a majority in the lower house.

The former ECB President said his decision was “painful” but due. He told the Italian Senate: “Today’s statement allows me to explain the reasons for a choice – resignation – that as painful as it is, was due.

“I believe that a prime minister who has never appeared before the voters should have the widest possible support in Parliament.”

Hinting at an early general election, Mr Draghi added: “Italy is strong when it is united. Unfortunately in recent months, the distinctions between parties and divisions have prevailed.

“Now the only way, if we want to stay together, is to rebuild the pact of trust from scratch.

“It is mainly the Italians who ask for it.”

A debate on the government’s future is now expected to take place at the lower house on Thursday.

The Eurozone’s third-largest economy’s political turmoil has sparked panic in the EU with Spanish Prime Minister Pedro Sanchez pleading for Mr Draghi to stay on and save Europe.

Writing for Politico, the Spanish leader said the EU “needs” Mr Draghi.

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Italy news: Mario Draghi could resign and call for early elections today (Image: GETTY)

pedro sanchez eu needs mario draghi

Pedro Sanchez says the EU ‘needs’ Mario Draghi (Image: GETTY)

He added: “The role of Italy, one of the largest countries of the European Union, has been crucial.

“Some months ago, with then Prime Minister Giuseppe Conte and seven other EU leaders, we signed a letter calling — for the first time — for the launch of a common debt instrument to facilitate a solid recovery from the serious socio-economic crisis caused by the pandemic. And, in recent months, Mr Draghi’s government has been implementing the Italian Recovery Plan, which — like the Spanish one — must profoundly transform and modernise our economies. That is the idea behind ‘NextGenerationEU’.

“How the plan is implemented in Italy and Spain will determine the overall success of NextGenerationEU, since we are the member countries that will receive the largest share of the funds. Mario Draghi and I are aware of that, and so are our nations.

“When we were fighting against the impact of the pandemic, Mario’s Europeanism was also evident in the joint purchase of vaccines and the approval of the EU Digital Covid Certificate.

“Now, with rising energy prices, supply instability and, more broadly, rising inflation caused by Russian President Vladimir Putin’s war on Ukraine, we face a new challenge. And Mario’s ideas in recent months have been key in our debates. Italy and Spain have led the way, putting forward proposals, such as the joint purchase of gas and a gas price cap.

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“After the pandemic, and in the face of the war and its consequences, the EU must continue to advance on the path to recovery and the transformation toward green and digital transitions, while maintaining social cohesion.

“This is the path that the Spanish and Italian governments are following. And we must continue to do so, showing determination and unity among the 27, just as Mario Draghi has done so far.”

But little seems to have changed on the Italian political front since last week, when the 5-Star boycotted the confidence vote on measures aimed at alleviating the high cost of living, complaining that its own concerns had been overlooked.

It is still unclear whether Mr Draghi remains determined to quit at some stage in the next two days, or if he might change his mind and stay in office, as many people both inside and out of Italy have urged, fearing his departure could trigger chaos.

The former European Central Bank chief has enough backing to remain in office without 5-Star, but he has so far rejected that option because his original mandate was to lead a national unity coalition with parties from across the political spectrum.

5-Star leader Giuseppe Conte said at the weekend he wanted Draghi to signal that he was ready to enact some of his policy priorities before renewing his support to the government, including introducing a minimum wage scheme.

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eurozone crisis interest rates inflation ECB

Eurozone crisis: ECB is expected to rise inflation rates (Image: GETTY)

Complicating efforts to overcome the divisions, the rightist League party and its Forza Italia allies have said they do not want to share power with 5-Star anymore.

The 5-Star has held repeated meetings in recent days to try to decide its strategy, but remains deeply divided. Two party MPs said that as of Tuesday evening they had not received any indication on how to vote in Wednesday’s debate.

If Mr Draghi believes his government cannot be revived, he would hand in his resignation once more to President Mattarella, almost certainly opening the way for elections in late September or early October.

Italy has not had an autumn election since World War Two as that is the period normally reserved for drawing up the budget.

Credit rating agency Fitch said on Monday that Mr Draghi’s resignation would make structural reforms and fiscal consolidation ever more challenging in Italy, which has the second highest debt-to-GDP ratio in Europe after Greece.

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