Italian Prime Minister Draghi steps down after coalition implodes

Italian Prime Minister Mario Draghi has resigned after efforts to bring the country's fractious parties to heel failed, kicking off a snap election campaign which could bring the far right to power.

On Thursday, the internationally respected 74-year-old formally handed his resignation to President Sergio Mattarella, whose role it is to now guide the country out of the crisis.

Mattarella is likely to dissolve parliament and call early elections for September or October, according to political analysts. Draghi may stay on as head of the government until then.

"Italy betrayed", the Repubblica daily front page cried on Thursday, while the Stampa ran with "For Shame".

Draghi, a former head of the European Central Bank, was parachuted into the premiership in 2021 as Italy wrestled with a pandemic and ailing economy.

On Wednesday, he had attempted to save the government, urging his squabbling coalition to put aside their grievances for the sake of the country.

 "Are you ready?" he asked the Senate four times. "Now was not the time for uncertainty, amid a myriad of challenges, from a struggling economy and soaring inflation to the Ukraine war."

READ MORE: Italian PM Draghi's govt in peril as three coalition allies boycott vote

Political equations

Three parties — Silvio Berlusconi's centre-right Forza Italia, Matteo Salvini's anti-immigrant League and populist Five Star Movement — opted to sit out the vote, saying it was no longer possible for them to work together.

The crisis was sparked when Five Star snubbed a key vote last week, despite warnings from Draghi that it would fatally undermine the coalition.

His downfall comes in spite of recent polls suggesting most Italians wanted Draghi to stay at the helm until the scheduled general election next May.

Supporters of Draghi had warned a government collapse could worsen social ills in a period of rampant inflation, delay the budget, threaten EU post-pandemic recovery funds and send jittery markets into a tailspin.

Laurence Boone, France's European affairs minister, said Draghi's expected resignation would open a "period of uncertainty" and mark the loss of a "pillar of Europe".

Anxious investors were also watching closely as the coalition imploded.

The European Central Bank was due on Thursday to unveil a tool to correct stress in bond markets for indebted eurozone members, such as Italy.

The spread — the difference between 10-year Italian and German treasury bonds — widened to 215 points by market close on Wednesday. Milan's stock market dropped 2.0 percent on opening on Thursday.

READ MORE: Italy's Draghi lays down conditions for government survival amid crisis