Italy sparks fears of new European crisis

Fears of a new European crisis grew yesterday over Italy's incoming eurosceptic government, which has vowed to reject the Brussels austerity diet and to crack down on immigrants.

Governments and markets have suddenly become unsettled as the prospect of populists taking the helm of the EU's fourth biggest economy suddenly becomes a reality after months of deadlock.

A period when the rest of the world seemed to be in denial finally seemed to be over as Italy's president was tasked yesterday on whether to approve little-known lawyer Giuseppe Conte as prime minister.

The anti-establishment Five Star Movement and the anti-immigrant League - togetherthe EU's worst nightmare - put his name forward to represent the biggest winners from March's election. "There are some things there that are worrying, yes," EU Trade Commissioner Cecilia Malmstrom told reporters in Brussels yesterday when asked about the Italian situation.

Fear number one is that Italy, a founder member of both the EU and the euro, is set to irk financial markets and trigger a new eurozone crisis by refusing to stick to public spending and debt targets set by Brussels.

The bloc's enforcer for the euro, European Vice President Valdis Dombrovskis, issued a tough public warning to the incoming Italian administration to pursue a 'responsible' budget policy.

"We view it as important that the Italian government remains on course in pursuing a responsible budget policy," Dombrovskis told the German business daily Handelsblatt.

The no-nonsense Latvian noted that Italy has the second highest level of state debt after Greece, explaining why Brussels is anxious that Rome continues to follow the EU rules.

The fears in Europe are not just linked to the economy. Alarm is also rising about the success of Five Star's anti-EU platform and the anti-immigrant stance of the League.

They have revived fears in Brussels and other capitals that Europe has failed to roll back the wave of right-wing populism that sparked the 2016 Brexit vote as successfully as first thought.

Those fears were sidelined after the Europe-loving French President Emmanuel Macron beat far-right candidate Marine Le Pen in elections last year, but now the spectre has returned.