Italian PM Mario Draghi resigns as coalition collapses

Italian Prime Minister Mario Draghi is to resign hours after populist coalition partner Five Star withdrew its support in a major confidence vote.

The former head of the European Central Bank has led a unity government since February 2021.

In a statement, he said the pact of trust that had sustained the unity government had gone.

"I will hand my resignation to the president of the republic this evening," he said.

The crisis in the EU's third biggest economy was triggered when Five Star leader Giuseppe Conte refused to back the government's €23bn (£19.5bn) package of economic aid for families and businesses, arguing Mr Draghi was not doing enough to tackle the cost of living crisis.

Even though the government comfortably won Thursday's vote in the Senate, the prime minister had warned repeatedly that without Five Star's support the government could not continue.

Dubbed "Super Mario", he went to see President Sergio Mattarella and, after reflecting on his future, issued his statement of resignation.

"Today's votes in Parliament are very significant from a political point of view. The national unity majority that supported this government since its creation no longer exists," he said.

Elections were already due early in 2023 but Mr Draghi's resignation means they are likely to be brought forward to the autumn.

Right up to the Senate vote, attempts were made to resolve the crisis. Milan's stock market tumbled 3% as nervousness spread to investors.

The 74-year-old former ECB chief was appointed last year by President Sergio Mattarella to save Italy from its endemic instability and lead the post-pandemic recovery.

Five Star was originally the biggest party in the coalition but has seen a string of defections and falling support. Former party leader Luigi di Maio accused the party of a cynical plan to bring down the Draghi government to revive its own support, while dragging Italy to economic and social collapse.

The former ECB chief was appointed last year by President Sergio Mattarella to save Italy from its endemic instability and lead the post-pandemic recovery. But now Mr Draghi has been cornered by political turmoil in Italy's fragmented parliament.

European Union Economy Commissioner Paolo Gentiloni, who is himself a former Italian prime minister, said earlier the EU's executive was watching developments in Rome "with due detachment, but with worried astonishment".