Italy’s populists close to government deal

Italy’s anti-establishment Five Star Movement and right-wing League party say they have made significant steps to forming a government, more than two months after a general election.

Luigi Di Maio of Five Star and Matteo Salvini of The League have been given until Sundayto solve their differences.

The prospect of a populist, Eurosceptic government has worried investors.

But a deal would end political deadlock and the threat of another vote.

The two leaders said in a joint statement they were aiming to “provide a response and a political government for the country as soon as possible”. They have given no indication who would lead the government or what their policies will be.

Di Maio wrote on Facebook: “I cannot hide my joy and happiness that we can finally start solving Italy’s problems”.

Once a programme is agreed, Five Star members are expected to have an online vote on it, in line with the movement’s belief in direct democracy.

President Sergio Mattarella, who had earlier given the parties until Thursday afternoon to reach a partnership deal, agreed to extend the deadline. But in a speech he appeared to warn them not to build a government that confronted the European Union and the euro.

It would be a mistake, he warned, “to look to 19th-Century solutions when trying to solve the problems of the 21st Century”.

Italy’s main FTMIB share index fell by more than one per cent and government bond yields hit a seven-week high as the prospects of a populist coalition grew./BBC