Prime Minister Giuseppe Conte wins vote in Senate, heads minority government

LONDON – Italy prevented further political chaos on Tuesday after Prime Minister Giuseppe Conte survived a vote of confidence in the Senate.

The country was embroiled in new political uncertainty over the past week after a smaller party withdrew its support of the coalition government, leaving the country without a majority in parliament.

However, Italian Senate lawmakers supported Conte in a vote on Tuesday by 156 to 140, allowing him to remain in office. He was also supported by the House of Representatives in a vote on Monday evening. Conte will now lead a minority government in a country prone to political disputes.

Italia Viva, the small political party founded by former Prime Minister Matteo Renzi, left the coalition last week over disagreements on how to invest upcoming EU funds to support the Italian economy.

Renzi is accused of acting in his own political interest by stimulating public opinion for his newly formed group. His party abstained from the crucial vote on Tuesday night, instead of going against Conte and helping to bring down the government.

One of the main challenges facing the now minority government, aside from the raging coronavirus pandemic, is rescuing the Italian economy, where GDP (gross domestic product) is projected to fall 10% by 2020.

The coalition formed by the Five Star Movement and the Democratic Party, two pro-EU parties, must submit a recovery plan to Brussels for approval in mid-February.

Paolo Gentiloni, European Commissioner for Economic Affairs who will review recovery plans, said on Monday evening that fiscal “imbalances are in danger of deepening”.

The eurozone had worked to reduce government deficits and credit levels before the pandemic, and there are concerns that post-pandemic fiscal positions will be much worse if the impending stimulus is not properly invested.

This is not the first time that Conte has survived internal divisions within his government. The former law professor without political affiliation was the compromise candidate appointed prime minister in June 2018, when the Five Star Movement and the anti-immigration Lega party formed a coalition.

However, in the summer of 2019, Lega raised a vote of no confidence in the coalition government, eventually seeing itself replaced in the government by the Democratic Party, and what would then become Italia Viva.

A little over a year since then, Conte has remained in power, but with his third government formation.

The bond market has shown some concern over the past week, with the latest political dispute in Italy bringing interest rates slightly higher.

However, the market response has been somewhat curtailed by the broader European context, in which the European Central Bank continues to buy up large amounts of government debt and the European Commission will soon distribute new funds.