Italian center-left leader Matteo Renzi said on Monday he would begin talks to form a new government within 24 hours, and expected to lay out a program of reforms to be completed over the next few months.
Renzi needs to seal a formal coalition deal with the small center-right NCD party to secure a majority and to name his cabinet before seeking a formal vote of confidence in parliament, probably later this week.
He has promised a radical program of action to lift Italy out of its most serious economic slump since World War Two, but will have to deal with the same unwieldy coalition which failed to pass major reforms under its previous leader.
“In this difficult situation, I will bring all the energy and commitment I am capable of,” he told reporters after a 90-minute meeting with President Giorgio Napolitano when he was given a mandate to form a new government.
“The sense of urgency is extraordinarily delicate and important but it's also true that, given the time horizon we have set of a full parliamentary term, we'll need a few days before formally accepting the mandate,” he said.
The 39-year-old mayor of Florence has been expected to take over since he engineered the removal of his party rival Enrico Letta as prime minister at a meeting of the Democratic Party leadership last week, following growing impatience with the slow pace of economic reforms.
The euro zone's third largest economy is technically no longer in recession since it scraped back into growth in the fourth quarter of 2013. However, it remains profoundly marked by the crisis with a two trillion euro ($2.7 trillion) public debt, a rapidly crumbling industrial base and millions out of work.
Renzi has promised swift action to create jobs, reduce taxes and cut back the stifling bureaucracy weighing on employers and business, but has offered few specific policy proposals and a promised Jobs Act expected last month has been delayed.
However, he said he expected to lay out full reforms to Italy's electoral law and political institutions by the end of February, to be followed by labor reforms in March, an overhaul of the public administration in April and a tax reform in May.
Economy ministry choice eyed
With the formal steps leading to the formation of a new government underway, attention has focused on Renzi's likely choice as economy minister who will be vital to reassuring Italy's international partners.
Speculation has concentrated on Lucrezia Reichlin, a professor at the London School of Economics who is also in the running to become deputy governor of the Bank of England.
If confirmed, her appointment would continue a series of technocrat finance ministers following Bank of Italy official Fabrizio Saccomanni, the incumbent, and his predecessor Vittorio Grilli, a senior official from the Treasury.
Other possible candidates include Fabrizio Barca, a minister in the technocrat government of Mario Monti which ran Italy from 2011 until last year, and Giampaolo Galli, a PD member of parliament and former Bank of Italy economist with a background in the business association Confindustria.
Renzi declined to comment on the possible makeup of his cabinet. “Our attention is on content and not other issues,” he told reporters after meeting the president.
One area which European Union partners will be watching closely is budget policy, an area where Letta stuck to strict Brussels orthodoxy, squeezing the deficit within the three percent of GDP ceiling.
Renzi has said that Italy should be allowed to break the borrowing limits in exchange for structural reforms to encourage economic growth, an approach which could cause conflict with EU partners including Germany.
Financial markets, which nearly sent Italy crashing out of the euro zone little more than two years ago, have reacted favorably to Renzi’s expected nomination with 10 year bond yields falling to their lowest level in eight years on Monday.