Italy's ruling parties face deadline on govt talks

ROME: Italy's ruling parties remained locked in talks ahead of a deadline Tuesday to agree a new government, risking further uncertainty despite the coronavirus pandemic that has devastated the economy.

Prime Minister Giuseppe Conte quit last week after one of his coalition partners withdrew in a row over the government's handling of Covid-19, but still hopes to return at the helm of a revised cabinet.

The ruling parties, notably the populist Five Star Movement (M5S) and centre-left Democratic Party, have since Friday been in detailed talks on the way forward, including with former premier Matteo Renzi's Italia Viva, which sparked the crisis by leaving the government last month.

President Sergio Mattarella, who as head of state is responsible for finding a way through the crisis, gave them until Tuesday to show they could form a government -- with or without Conte at the helm.

Mattarella has stressed the urgency of the task as Italy navigates the pandemic, which has killed almost 89,000 people.

The challenge was underlined by figures showing Italy's economy shrank 8.9 percent in 2020 -- the biggest contraction since the end of World War II.

More than 420,000 jobs were lost between February and to the end of the year, including 101,000 jobs in December alone, according to national statistics agency Istat.

"Every hour, 50 people lose their jobs," noted La Stampa newspaper.

Mattarella has tasked the speaker of the lower house of parliament, Roberto Fico, to broker the negotiations between the ruling parties, and report back by Tuesday.

If the parties cannot agree to share power again, the president may try to form a national unity government to ride out the crisis.

Media reports suggest parties are still haggling over ministerial posts.

"They are trying to reach agreement, but Italia Viva calls for the European Stability Mechanism (ESM) and heavyweight jobs," said leading daily Corriere della Sera.

The ESM is the eurozone rescue fund. M5S strongly opposes its use, fearing tough conditions will be attached.

Italy, however, expects to benefit from more than 200 billion euros ($240 billion) in European Union recovery funds -- although arguments over how to spend it were the trigger for the political crisis.

The right-wing opposition coalition, comprising notably Silvio Berlusconi's Forza Italia and Matteo Salvini's far-right League, has called for immediate elections, which they would expect to win.