ROME — Italy’s president rejected the resignation of Prime Minister Mario Draghi on Thursday after a day of political drama that threatened to bring down a national unity government that has been in office less than 18 months.
Draghi, the former European Central Bank (ECB) president, announced he was to resign on Thursday after the 5-Star Movement, a coalition party, failed to back him in a confidence vote over his plan to combat soaring prices.
“The national unity coalition that backed this government no longer exists,” said Draghi, who has been prime minister of a broad coalition since February 2021.
Draghi, 74, went to the Quirinale Palace in Rome to meet President Sergio Mattarella and hand in his resignation but Mattarella, the supreme arbiter in Italian politics, urged him to rethink.
Mattarella asked Draghi, who is an unelected technocrat, to address Parliament to get a clearer picture of the political situation.
Divisions among Italy’s political parties over issues such as the rising cost of living and how to respond to Russia’s invasion of Ukraine are being amplified by the approach of a general election due to be held in the first half of 2023.
Draghi, Italy’s sixth prime minister in the past decade, has won plaudits for helping to steer Italy through the coronavirus crisis and his profile has helped give the country more clout on the international stage.
The confidence vote had become a focal point for tensions within Draghi’s government. The 5-Star party had wanted Draghi to do more to help families cope with rising inflation even if it meant a steeper increase in government borrowing.
Draghi had said he would not want to lead a government without 5-Star, which emerged as the largest party in the previous election in 2018 but has since suffered defections and a loss of public support.
Mattarella, 81, can try to persuade Draghi to form another government, find a new caretaker leader to take Italy to the election due next year, or call an early election.
Italy has not had an autumn election since World War II, as that is normally when the budget is drawn up and approved by Parliament.
The risks of a collapse of the Draghi government rippled through financial markets where Italian bond yields rose sharply, indicating investors demanding a higher premium to hold its debt, and shares fell to their lowest levels since late 2020.
The turmoil comes at a challenging time for Italy, the third-largest economy in the euro zone, where borrowing costs have risen sharply as the ECB starts tightening its monetary policy.
The ECB is working on a new tool to contain divergence between German borrowing costs and those of highly indebted member states such as Italy.
Draghi had been seen as providing reassurance that Italy would respect any conditions attached to the new mechanism, but his departure would create fresh uncertainty.