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In a deal that puts Italy on a collision course with the EU, Italy’s 5 Star, League Reach Deal on Government Program.

Italy’s antiestablishment 5 Star Movement and hard-right League party have reached an agreement on a government program, likely clearing the way for the formation of a governing coalition between Italy’s two largest antiestablishment parties.

The formation of a new government—which is expected in the coming days—between the two groups marks one of the biggest wins yet for the political insurgencies shaking Europe’s establishments.

The two parties struck a deal Sunday evening on a pact that would underpin a government coalition between the two. Leaders of the two groups, however, are still negotiating the members of a government cabinet, including the prime minister. An announcement of those names should come early this week, according to weekend statements by leaders of both groups.

Both parties have embraced euroskeptic ideas and even flirted with the idea of withdrawing Italy from the single currency. However, they toned down their rhetoric during the electoral campaign and have softened their positions further since the March elections.

As noted two days ago in Five Star Lega Deal Takes Shape: Platform Includes Parallel Currency, the platform provisions will be a hair-raising event in Brussels with the "More Europe" nannycrats.

Platform Provisions

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  1. The end of the pension reforms under Mario Monti.
  2. A flat tax on companies and people - in other words a massive tax reduction.
  3. Both parties are anti-immigration
  4. A study on the so-called minibot. This is a parallel currency based on future tax receipts, similar to the plans proposed by Yanis Varoufakis in Greece. The minibot was in the Lega’s election manifesto.
  5. A citizens’ income, which is Five Star’s big idea, to be implemented next year.

The EU will not be pleased with any of those.

Up to the President

Officially, it's up to Italian President Sergio Mattarella to approve the deal.

And Mattarella has warned both parties against anti-Euro rhetoric.

Realistically, however, Mattarella has little choice. If instead he calls new elections, it's highly likely that Five Star and Lega would pick up an even bigger majority.

Mike "Mish" Shedlock