Italian PM Mario Draghi to resign after failing to revive his coalition government

The Prime Minister of Italy is expected to step down Thursday, paving the way for fresh elections.

After failing to unite his coalition government, Draghi said he was going to meet with Mattarella and inform him of his intentions.

We would like to thank you for the work you have done. After the vote took place last night by the senate of the republic, I asked to suspend this session because I am on my way to the president to communicate my intentions.

The government collapsed after coalition partners snubbed him in a vote of confidence.

The Five Star Movement, one of the parties in the coalition government, decided not to participate in the election. The Lega party said they wouldn't participate.

There could be snap elections in September or October.

Mattarella asked Draghi to lead more negotiations with lawmakers in order to avoid snap elections.

The new decree was opposed by the Five Star movement. Five Star boycotted the vote on the policy package, angering the right-wing parties in the coalition.

Italian politics has been in a state of limbo for the last week after the upper house of Parliament was asked by Mattarella to give the government a vote of confidence.

The Italian bond yield went up on the expectation that the president will step down. At the beginning of the year, the yield on the 10-year bond was around 1%.

Equity markets were down on Thursday. Italy's main index was almost 2% lower in early European trade.

There are many reasons why investors are worried about Italy. According to opinion polls, a fragmented parliament means that new elections could lead to difficult coalition negotiations.

Italy is facing record inflation and has one of the highest debt piles in Europe. The economic performance of Italy could be affected by the European Central Bank's decision to raise interest rates.

Italy is slowly turning into an accident waiting to happen, according to a note by the chief economist at Berenberg.

There are three major problems: a low growth trend, dismal demographics and a penchant for politics.

We have to be prepared for disruptive bouts of noise, but not a genuine euro crisis 2.0, for the time being.

Over the weekend, hundreds of mayors signed an open letter asking the president to remain. The leaders of the unions and the industrialists came together to ask the president to stay in office. Thousands of citizens have signed an online petition asking the president to stay.

The last 15 months have seen political stability in Italy, which has helped to receive over 200 billion euro in recovery funds.

Within the context of Russia's invasion of Ukraine, his leadership was important and he played a role in EU sanctions.