Italian Prime Minister Mario Draghi resigns after failed trust vote

Draghi, an unelected prime minister and former president of the European Central Bank (ECB), has led a broad coalition for almost 18 months. President Sergio Mattarella has asked him to stay on in a caretaker capacity.

Italy will hold a snap national election on 25 September, the first  national election to be held in the autumn for more than a century in a country where the second half of the year is normally taken up with getting the budget law through parliament.

Draghi, Italy's sixth prime minister in a decade, had sought to stabilise the government as parties began to pull in different directions ahead of the planned elections due in the first half of next year.

The division within the coalition has up-ended months of stability in Italy, during which Draghi had helped shape Europe's tough response to Russia's invasion of Ukraine and had boosted the country's standing in financial markets.

"We must deal with the emergencies related to the pandemic, the war in Ukraine, inflation and the cost of energy," Draghi told cabinet colleagues.

He said that the government must also implement the National Recovery and Resilience Plan that sees Italy tapping billions of euros of post-pandemic European Union funds in return for reforms.

Draghi, however, received warm applause from lawmakers when he made a brief appearance in the lower house of parliament on Thursday, signalling his intention to step down.

"Even central bankers have their hearts touched sometimes," he quipped as he received the ovation. 

Opinion polls show a bloc of conservative parties, led by the far-right Brothers of Italy, could win a clear majority at the September polls.

Brothers of Italy, led by Giorgia Meloni, welcomed the news of elections. Her group, which polled just 4 per cent in the 2018 election, is now seen winning more than 22 per cet, which would make it Italy's largest party.

If the conservative bloc wins the September polls, Meloni, the only major leader not to join Draghi's government, will decide who should be prime minister.