Collapse of Italy's Draghi Cabinet... 'Unprecedented' Early Autumn General Election Held (Comprehensive)

Right-Wing Parties Stand Out in Public Opinion Polls

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Italian Prime Minister Mario Draghi resigned on the 21st (local time), leading to the collapse of Italy's coalition government. Italy plans to hold an early general election on September 25 to swiftly address pressing issues such as inflation and the resurgence of COVID-19.

On the 21st (local time), Bloomberg reported that Italy is scheduled to hold an early general election on September 25, with current polls showing the center-right coalition leading. President Sergio Mattarella officially announced the dissolution of parliament and the holding of an early general election on the same day Draghi resigned.

Prime Minister Draghi appeared before the lower house that morning to express his intention to resign, and President Mattarella accepted it but requested that he maintain his position temporarily to prevent a governance vacuum. The current parliament, formed through the March 2018 general election, was originally scheduled to serve until the first half of next year.

This will be the first time in Italy's constitutional history that a general election is held in the fall. Consequently, administrative and legislative procedures, including the formulation of next year's budget scheduled for the fall, are expected to face inevitable disruptions.

The situation favors right-wing parties. If the three right-wing parties?the far-right Lega, Brothers of Italy (FdI), and Forza Italia (FI) led by former Prime Minister Silvio Berlusconi?form a coalition, they can secure a majority of seats. Should the right-wing coalition gain a majority, Giorgia Meloni, leader of Brothers of Italy and currently a member of the lower house, could become the first female prime minister in Italy's constitutional history.

Public opinion also appears to be shifting toward right-wing parties. In polls conducted after Draghi's resignation announcement, Brothers of Italy garnered 23.2% support, emerging as the core of the right-wing coalition. The Democratic Party followed with 22.2%. The far-right Lega received 15.1%, the Five Star Movement (M5S) 11.3%, and Forza Italia 8.1%.

Earlier, Prime Minister Draghi submitted his resignation abruptly after the Five Star Movement (M5S), the central pillar of his national unity cabinet, abstained from voting on a livelihood support bill proposed by the cabinet in the Senate on the 14th. Although President Mattarella proposed a confidence vote in parliament, major parties boycotted it, leading Draghi to step down after just one and a half years in office.

The collapse of the coalition government also unsettled financial markets. On the same day, the Milan Stock Exchange (FTSE MIB) experienced a sharp drop of over 2% during trading but recovered somewhat to close down 0.7%. The spread between 10-year government bond yields of Italy and Germany widened to 241 basis points (1bp=0.01%), marking the highest level in the past month.

The collapse of the Draghi cabinet has also heightened concerns within the European Union (EU). Draghi, a former president of the European Central Bank (ECB), was appointed by President Mattarella as a "firefighter" to resolve political and economic crises after the coalition led by then-Prime Minister Giuseppe Conte (now leader of M5S) collapsed in February last year. Additionally, Italy's economy is the third largest within the EU. Internally, it has become more difficult to gain agreement on reforms necessary to secure 200 billion euros in EU aid led by Draghi. Some fear that Italy's next cabinet might pursue EU withdrawal, similar to the United Kingdom.

This content was produced with the assistance of AI translation services.