ROME—Italian Prime Minister Giuseppe Conte is set to resign on Tuesday, his office said, as Europe’s underlying problems of economic stagnation and political fragmentation start to reassert themselves amid the gruelling pandemic.
The fall of Italy’s government, in office for just 17 months, is a symptom of the continuing fissures in Italian and European politics. Established and insurgent parties are struggling over Europe’s future, stable majorities are often elusive and leaders are searching for ways to overcome long-term economic underperformance—nowhere more so than in Italy.
Rome’s latest political breakdown is likely to cause concern in the capitals of Europe’s stronger economies, such as Germany, which last year agreed to underwrite a massive European Union investment plan for economic recovery from the coronavirus.
Italy, due to receive more than €200 billion in EU funds, the equivalent of about $243 billion, is the plan’s biggest beneficiary. But Italian leaders’ inability to agree on a coherent economic strategy reduces the chances that the EU’s third-biggest economy will use the funds effectively.
At stake is not just Italy’s chances of escaping from its long economic decline, and of stabilizing its sky-high national debt, but also the political trust between northern and southern Europe that the euro needs for its long-term viability.