- Italia Viva walkout leaves coalition without majority.
- Prime minister to face confidence votes in parliament.
- Political uncertainty has pushed up borrowing costs.
ROME: Italian Prime Minister Giuseppe Conte worked the phones on Friday, trying to secure enough votes in parliament to allow him to stay in power after a junior ally quit the cabinet this week.
Conte is due to address the lower house on Monday and the upper house Senate on Tuesday about the political chaos, which was triggered by former premier Matteo Renzi in a row over the coalition's handling of the coronavirus and economic crises.
Confidence votes will be held in both chambers. But while Conte should be able to muster a majority in the lower house, the situation in the Senate is much tighter, with the government on paper needing to find 11 lawmakers willing to join its ranks.
Conte and his team were looking for backing among the list of 21 non-aligned senators and hoping that some of Renzi's own 18-strong Senate team might defect and remain within the ruling coalition, which has been in office just 17 months.
"We have signs of willingness and interest from many parliamentarians. Let's see if this allows the government to keep its majority," Andrea Orlando, the deputy head of the co-ruling Democratic Party (PD), told Sky Italia TV.
However, he acknowledged that even if they did manage to scrape together enough support in the 321-seat Senate, it would not resolve all their problems.
"It is clear that a crisis can be avoided by having just one more vote, but one can't govern with just one additional vote," Orlando said, pointing to prolonged political instability.
Renzi, who has come under attack on social media for pulling the Italia Viva party from the cabinet, said he did not believe Conte would be able to win Tuesday's vote.
While Conte was searching for stray senators, the opposition centre-right block was also seeking to win over waiverers to try to force the government's resignation, potentially opening the way for early elections, two years ahead of schedule.
Opinion polls say the opposition, led by League leader Matteo Salvini, would triumph in a national vote.
The political uncertainty has pushed up borrowing costs, with yields on Italy's sovereign bonds (BTPs) set to post their biggest weekly rise in 12 weeks.
Analysts said markets would become much more volatile if snap elections looked likely, amid investor concern over the economic policies of any government headed by the eurosceptic, populist League.
"We see new elections as the worst possible outcome for BTPs, but this is highly unlikely, in our view," Societe Generale analysts Jorge Garayo, Ninon Bachet and Adam Kurpiel told clients.