TIMELINE: What happens next in Italy’s government crisis?

Prime Minister Mario Draghi has resigned, meaning the collapse of another Italian government. So what happens now?

Italy's Prime Minister Mario Draghi addresses the Senate in Rome on July 20, 2022.
Italian Prime Minister Mario Draghi addresses the Senate in Rome on July 20, 2022. Photo by Andreas SOLARO / AFP.

The end finally came for Italy’s faltering coalition government on Wednesday, after three of the biggest parties sat out a key confidence vote in Prime Minister Mario Draghi.

READ ALSO: Why has Italy’s government collapsed in the middle of summer?

Draghi resigned on Thursday morning, marking the end of his ‘unity’ government, and President Sergio Mattarella dissolved parliament later that same day. Elections will now be held in early autumn.

So what does this mean for the country now?

Draghi caretaker government: July – late September

On Thursday Draghi handed in his resignation to Italian head of state President Sergio Mattarella for the second time in the space of a week – and this time it was accepted.

Draghi will now remain in place in a caretaker role with limited powers until autumn elections.  

He won’t be able to draft bills or approve legislative decrees except for when deadlines are imminently approaching, as is the case for Italy’s pandemic recovery plan (Piano Nazionale di Ripresa e Resilienza, or PNRR).

Early elections: September 25th (probably)

The Italian constitution states that elections must be held within 70 days of parliament being dissolved.

In the past, elections have always taken place in the 60-70 day window, to allow enough time for parties to campaign and for some would-be candidates to gather the requisite number of signatures to join the ballot.

That means that elections would be most likely to happen no earlier than Sunday September 25th, which coincides with the Jewish holiday Rosh Hashanah. This is a rarity, as Italy usually tries to avoid holding elections on religious holidays.

New government: October/November/December??

It can take weeks or even months for Italy to form a government after elections are over.

In 2018, it took 90 days for the Conte I government to be sworn in after the March 4th vote, notes news agency Ansa; in 2013, it took Enrico Letta’s coalition government 63 days.

In this case it’s likely to be quicker, as the so-called ‘centre-right’ (in reality, mostly hard-right) coalition of Brothers of Italy, Lega and Forza Italia are expected to be the clear winners, without the need to negotiate with other parties to form a majority.

Even when centre-right won a clear majority in 2008, though, it still took 25 days to form a government.

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EXPLAINED: Why people in Italy might have to carry more cash from now on

Under Italy’s new budget law, retailers will no longer be fined for refusing card payments on amounts lower than €30 – a controversial move that is expected to have a knock-on effect for shoppers.

EXPLAINED: Why people in Italy might have to carry more cash from now on

Italy’s new budget bill, whose full text was made available to the media on Wednesday, is set to add yet another controversial chapter to the country’s long and troubled history of card payment laws.

According to a clause included in the 2023 budget law, fines for retailers refusing card payments on amounts lower than €30 will now be suspended until at least June 2023.

As set out by the bill, the six-month suspension will allow the newly created Ministry of Enterprises and Made in Italy to “establish new exemption criteria” and “guarantee the proportionality of the given penalties”. 

READ ALSO: Key points: What Italy’s new budget law means for you 

And, though it isn’t yet clear what new exemptions the government is currently considering nor what exactly is meant by “proportionality”, what’s certain is that residents will now have to repopulate their pockets with some good old banknotes because businesses – from taxi drivers to cafes and bars might not accept card payments for small amounts.

Fines for businesses caught refusing card payments had been introduced by Draghi’s administration back in June 2022, with retailers liable to pay “a €30 administrative fee plus four percent of the value of the transaction previously denied”, regardless of the amount owed by the customer. 

Euro banknotes in a wallet

Under Italy’s new budget law, retailers will no longer be forced to accept card payments for transactions under €30. Photo by Ina FASSBENDER / AFP

But, the measure had quickly sparked outrage among retailers, who lamented having to pay hefty bank commissions on every electronic transaction – some business owners even went as far as openly defying the law and organised themselves into a No-Pos Committee (Comitato No Pos). 

Given the latest developments, it seems like their efforts might just have paid off. 

But, while many business owners will surely be happy with the suspension, others across the country have already raised doubt about the potential ripple effects of the government’s move.

Aside from shoppers having to begrudgingly carry more cash than they’re currently used to, many political commentators are warning that the suspension might be a “gift to tax dodgers” in a country where, according to the latest available estimates, tax evasion costs state coffers nearly €90 billion a year.

READ ALSO: EXPLAINED: What’s changing under Italy’s post-pandemic recovery plan? 

It’s also worth noting that the introduction of fines for businesses refusing card payments was one of the financial objectives set out within Italy’s Recovery Plan (PNRR), which expressly refers to the fight against tax evasion as one of the country’s most urgent priorities. 

It is then likely that the new cabinet will at some point have to answer for the latest U-turn on Recovery Plan policies in front of the EU Commission.