Conte Says Secure in Post as Italy Coalition Tensions Rise

(Bloomberg) --

Italy's Giuseppe Conte is insisting that he'll serve out his full term as premier as tensions within his ruling coalition build up amid a struggle to restart the crippled economy.

The current government is certain to reach the end of its term in 2023, Conte told newspaper Il Fatto Quotidiano in an interview published Wednesday. “The forces of the majority are all aware of the great responsibility we carry.”

Conte, who heads a coalition of the anti-establishment Five Star Movement, the center-left Democratic Party and smaller parties, has come under political attack as he's begun gradually lifting Italy's stringent nationwide lockdown imposed to halt the spread of the coronavirus.

Infighting within the administration is delaying a 55 billion-euro ($60 billion) stimulus package, with allies including Five Star and the Democrats at odds over measures including boosting liquidity for businesses and an emergency income for people trapped in the underground economy.

Regional and business leaders have joined in the criticism, calling on the prime minister to speed up easing containment measures. While the manufacturing and construction sectors were allowed to restart on Monday, many other businesses remain shut.

Italy's economy will shrink by 9.5% this year, the European Commission said Wednesday, forecasting an unemployment rate at 11.8%. The Rome government estimates output falling 8% this year, while Bloomberg Economics sees a 13% contraction.

National Unity

The tensions have triggered media speculation about the coalition's stability, with many suggesting the possibility of a so-called government of national unity led by a well-known figure like ex-European Central Bank chief Mario Draghi.

But differences between the parties, and their mutual distrust, make this a difficult prospect. Conte told Il Fatto that Draghi “has never demonstrated to me an interest in the premiership and I don't believe, knowing him, that he would let himself be urged by the various initiatives underway.”

Conte, who is seeking European Union assistance including joint debt issuance, told Il Fatto that Italy, Spain and France are ranged against the more “frugal” position of northern countries.

“We will continue to fight so that the more ambitious hypothesis prevails,” Conte said, adding a new recovery fund is unlikely to start before the summer.

President Sergio Mattarella sees early elections as the only alternative if Conte falls, because no alternative majority with a credible program is possible, according to officials who asked not to be named discussing a confidential issue.

Italy's head of state is tasked with holding consultations with parties seeking to form a new government, dissolving parliament ahead of elections and naming the prime minister.

Fall Referendum

Elections could be held in September or October, without waiting for a fall referendum on cutting the number of lawmakers in both houses of parliament, the officials said. Italian newspapers reported earlier Wednesday on Mattarella's views.

Ex-Premier Matteo Renzi, who leads junior coalition party Italy Alive, has threatened to withdraw support for the government if Conte fails to address the economic fallout from the shutdown. But Renzi's party, which only has around 3.5% support in opinion polls, risks a poor performance in any new election.

Agriculture Minister Teresa Bellanova, a member of Renzi's party, told state-owned Rai radio on Wednesday that she may resign if her demand for immigrant workers to be given legal status is rejected, Ansa newswire reported.