Mattarella can still appoint Cottarelli even if the new government loses the confidence vote, but with the approval of parliament, the new government could be given a mandate to pass an electoral reform that could make lengthy stalemates like the ones that emerged after the general elections this year and in 2013 less likely going forward.
Calls for Italian President Sergio Mattarella to be impeached for rejecting the choice of eurosceptic populists for economy minister will not succeed, analysts said yesterday amid warnings of an institutional crisis in the eurozone's third largest economy.
Luigi Di Maio, the Five Star leader, called for the president's "impeachment" while Matteo Salvini, the League leader, fulminated that Italy was "not a colony" of Brussels, Paris or Berlin and that the coming elections would be a contest between "the people and the palace".
As a "spending commissioner", Mr Cottarelli used a 72-page document to recommend €32bn worth of government cuts - including a squeeze on pensions. "I am very angry".
Italy's designated Prime Minister Giuseppe Conte addresses the media after meeting with President Sergio Mattarella on Sunday in Rome.
"Why don't we just say that in this country it's pointless that we vote, as the ratings agencies, financial lobbies decide the governments", a livid Di Maio said in a video on Facebook. He called for the president's impeachment.
However, Italians could be heading back to the polls as Mr Mattarella said he was considering political party leaders' requests for another election.
Matteo Salvini, leader of the eurosceptic party League. Its implications extend well beyond Italy, to the European Union as a whole. The only option now, he said, is for Italy to hold yet another election.
While such rhetoric serves to fan the flames of popular resentment and undermines the authority of Italy's democratic institutions, it is based on the unsafe premise that democracy is about the supremacy of the will of a majority. In March, 5-Star ran its own campaign while the League campaigned as part of a right-wing coalition with the party of former prime minister Silvio Berlusconi.
The president approved all of the other cabinet picks but rejected the coalition partners' choice for the economy portfolio claiming it would have negative effect on financial markets and the Italian economy.
Mr. Mattarella's naming a former International Monetary Fund official, Carlo Cottarelli, as prime minister to form a "technocratic" government - that is, one sure to implement the austerity principles of the IMF - only throws oil on the fire.
Mr Mattarella defended his rejection of Mr Savona, who he said was determined to pull Italy out of the currency it had created.
Italy has been without a government since indecisive elections on 4 March resulted in a hung parliament. It is not the first time that an Italian head of state has vetoed a minister proposed by an incoming government.
Since the formation of the populist ruling coalition, Italian stocks have lost nearly 9%.
Italy's economic problems are mostly homegrown, with a 20-year erosion in productivity, a cumbersome bureaucracy and a dominant small-business sector that has stifled productive investment. "The truth is they don't want us to take power". "They should shut up". They're effectively saying "you can't have that, they must be pro-Europe"'. "I think that about 80% would vote to get rid of the euro".
A lot is happening in Italy and what's the main disagreement over regarding the formation of the government in Italy?
"We may now be in for an extended period of heightened uncertainty ahead of fresh elections - assuming that's where we're headed - but that's not a story for today", said Ray Attrill, head of foreign-exchange strategy at National Australia Bank in Sydney. "Time for more elections and bigger votes".
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