Five Star and League move closer to forming Italian government

President Sergio Mattarella

President Sergio Mattarella proposed instating a 'neutral' government in Italy until the end of the year Credit ANDREAS SOLARO AFP

Negotiations on forming a coalition government between the far-right League and the anti-establishment 5-Star Movement are going well and a deal could be wrapped up soon, the two parties said in a joint statement on Thursday.

If parliament rejects the president's pleas, then the earliest possible date for an election would be July 22, when many Italians will have gone on holiday, meaning turnout could slump.

A question mark still hangs over who would clinch the top spot in a M5S-League coalition - Both Di Maio and Salvini have said they are willing to step back and let someone else take the premiership but, according to the press, neither has completely given up on their ambitions to lead the country.

After three failed rounds of consultations hosted by President Sergio Mattarella, Italy had looked to be heading either for a caretaker government, chosen by the president, or fresh elections. Berlusconi stressed, however, that FI would not vote in favour of a confidence motion on a M5S-League government.

Conflicts of interest such as that involving media magnate Berlusconi are among the issues on the agenda of the M5S-League working group, Bonafede said.

But Mr Diebel said that by the former Prime Minister clearing the way for this, it does not yet mean the end of his political career and could prove a good move if Five Star Movement and Lega fail to work together successfully. He added: "We would not impose vetoes or pre-conditions".

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"A political government is now more probable, and a mild negative market reaction is likely tomorrow", said Vincenzo Longo, an analyst at IG Markets.

A March 4 parliamentary election that laid bare Italians' disgust with traditional politics, anxiety over the economy and opposition to migrants.

The four-time premier, who had previously opposed a Five Star-League tie-up, said he would respect a decision of "another political force of the center-right to create a government with Five Star".

With Mattarella preparing to nominate a non-partisan figure as prime minister in an effort to break the deadlock, Di Maio and Salvini met in Rome Wednesday for one more attempt to agree on an alliance.

The two parties may have to work out their differences on the European Union (EU) and foreign policy, as the League is hardline euroskeptic and looks favorably on Russian Federation, while the Five Stars recently took a more pro-euro, pro-NATO stance. "Let the parties decide of their own free will if they should give full powers to a government... or else new elections in the month of July or the autumn".

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