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Italy's Democratic Party 'ready' to govern with Five Stars

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Italy's Democratic Party 'ready' to govern with Five Stars
A major sticking point is reportedly the role Five Star leader Luigi di Maio, pictured, would have in a future government. Photo: Vincenzo Pinto/AFP
07:47 CEST+02:00
UPDATED: The leader of Italy's Democratic Party has told the country's president his party is ready to form a government with the anti-establishment Five Star Movement following days of crisis talks after the ruling coalition collapsed.

President Sergio Mattarella met the leaders of the main political parties on Wednesday at the climax of what Italian newspapers have dubbed "the craziest crisis ever".

The anti-establishment Five Star Movement (M5S) and the centre-left Democratic Party (PD) now look set to form a new coalition, despite having been bitter enemies until just a few weeks ago. The M5S has since June this year been part of a populist coalition with the far-right League, but that government collapsed last week, while parliament was on holiday.

PD leader Nicola Zingaretti on Wednesday told Mattarella his party was prepared to govern with the M5S, and to accept the anti-establishment group's proposed prime minister. The parties had reportedly earlier disagreed over whether outgoing Prime Minister Giuseppe Conte -- a soft-spoken former academic chosen as a compromise prime minister last year -- should lead any new coalition.

M5S leader Luigi Di Maio said late on Tuesday that any deal would still have to be approved by party members in an online vote that would take place before the end of next week.

"Only if the vote is positive will the M5S support the proposed government project," he said.

The clock is ticking to ease the political turmoil, with Italy -- grappling with a huge debt mountain -- under pressure to approve a budget in the coming months. If it fails to do so it could face an automatic rise in value-added tax that would hit the poorest families the hardest and could plunge the debt-laden country into recession.

"Markets will likely cheer the (M5S-PD) partnership... as it avoids an election and possibly a long stand-off with Brussels later this year around the budget," said Craig Erlam, senior market analyst at OANDA.

IN DEPTH: Why do Italy's governments collapse so often?

Italy's presidential palace in central Rome. Photo: Filippo Monteforte/AFP

Mattarella has insisted that the crisis be resolved quickly, and if the PD and M5S cannot form a solid majority, the president is expected to call an early election for November. 

A return to the polls will likely favour Matteo Salvini, who triggered the crisis on August 8th when he withdrew his far-right League party from the governing coalition with M5S. 

Salvini has said he hopes Mattarella will not allow the "horse-trading to go on much longer", accusing the PD and M5S of spending their time "negotiating ministries" rather than working out a plan for the country.

PROFILE: Italy's PM Conte, the 'Mr Nobody' who found his voice

Political watchers have also warned a M5S-PD deal could favour Salvini in the end, should the hastily forged accord come undone at the seams over the coming month. Both the Movement -- which had sworn never to ally with traditional parties -- and the centre-left could lose support for getting into bed with the perceived "enemy". 

Should that happen, Salvini "will be well placed to swoop to power when the Italian economy hits what the German IFO survey, and the yield curve, are flagging as serious problems ahead," said Michiel van der Veen from Rabobank.

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