The European Union has spent the summer battling with Brexit and grappling over economic growth.
But one worry may be crossed off the concern list for now: Italy.
A pact between the center-left Democratic Party (PD) and the populist Five Star Movement (M5S) was agreed this week with the mild-mannered Giuseppe Conte returning as prime minister.
Though the deal is not yet closed.
The move came after the former coalition, made up of M5S and the far-right League collapsed after League leader Matteo Salvini pulled his party from the coalition, plunging the country into three weeks of turmoil.
Designate premier Giuseppe Conte delivers his speech after a meeting with President Sergio ... [+]
Salvini’s gamble was to trigger a snap election and profit off his party’s big win in May’s European Parliament vote.
'A Vicious Loop'
Italy is one of the founding members of the EU and the third-largest economy.
The EU's budget commissioner, Gunther Oettinger, said the alliance was "great news" for Italy and the bloc.
While the EU can breathe a sigh of relief the government crisis is on its way to being solved, some analysts say the new coalition could be over before it even really begins.
On August 30, M5S leader Luigi Di Maio said his party would only agree to the coalition with PD if it complied to a series of demands, such as reducing the number of parliamentarians and consenting to a new law to clamp down on migrants sea rescues.
Leader of Five-Star Movement, Luigi Di Maio, leaves after meeting with Italian President Sergio ... [+]
“It’s not a particularly coherent government and no key issues, such as the banking system and productivity, will be addressed,” said Wolfango Piccoli, co-president of Teneo Intelligence.
“It’s a vicious loop,” Piccoli said, regarding shaking up Italy’s finances.
Italy’s budget has been slammed by the EU for not meeting its fiscal rules. The new coalition must quickly draft a 2020 budget, or else VAT will rise from January, unless the government can find $26 billion elsewhere.
“We must immediately get to work and draw up a budget to avert the VAT hike, protect savers and offers solid prospects for economic growth and social development,” Conte said.
The EU will try to give Italy some fiscal flexibility, fearing the new alliance collapses and Salvini makes a comeback.
'A Government Born Overnight in Brussels'
The League leader has taken a hard line on migration, often turning charity rescue boats away from Italy’s ports, and has made the headlines for his criticism of the EU.
On August 30, Salvini accused Brussels and Berlin of conspiring to scrap his party from government. “They won’t get rid of Salvini and League ballbreakers so easily,” Salvini said. Salvini, who is still interior minister, is now calling on his supporters to hold and participate in marches across Italy.
The League party leader Matteo Salvini talks to journalists after meeting with Italian President ... [+]
In a Facebook announcement, he called it “a day of mobilization for those who don’t want a government born overnight in Brussels.” Salvini’s party has proved popular with Italians, who voted the League to the top of the EU parliament polls with 34% of votes, compared to M5S who received 17%.
“Part of this new government will work to address issues and topics that used to belong to Salvini’s sphere of action,” said Giuseppe Volpe, a political analyst at Cui Prodest.
“Criticizing the EU, the zero-tolerance immigration policy and public safety are usually felt as important issues for Italians as largely demonstrated by recent and previous polls.”
Volpe warned that if the new government fails to successfully address those issues, the electorate will vote for other parties that claim they do. Conte will now need to ensure PD and M5S set aside their differences by next week to form the government and pick their cabinet.
Italy has seen 65 governments in the space of 73 years.
If history repeats itself and the new alliance fails, the EU could have even bigger worries in the shape of a Salvini return.
