Italy President appoints interim prime minister until fresh elections

Italian President Sergio Mattarella has asked a former International Monetary Fund economist to form a government after a bitter falling out with the country’s populist parties

Carlo Cottarelli became known as ‘Mr Scissors’ for his cuts to public spending in Italy.

His appointment comes days after efforts by the Five Star and the League to form a coalition government collapsed.

After meeting the president, Cottarelli said he would present a programme to parliament, including a budget, to take Italy into new elections "at the beginning of 2019".

The prospect of elections as early as September hit European financial markets on Monday with analysts suggesting the move might simply delay a future populist government that wants to renegotiate key eurozone debt agreements.

Italy has been without a government since elections last March, after no political group formed a majority.

The Five Star and League attempting to form a coalition government, appointing Giuseppe Conte as Prime Minister. However, president Mattarella refused to accept the nomination of Paola Savona, a Eurosceptic, for the role of finance minister.

The rare move by the president sparked fury from both parties, who say they will reject Cottarelli's nomination in parliament.

After the president blocked Savona's appointment, Five Star leader Luigi Di Maio called on parliament to impeach the president.

"Why don't we just say that in this country it's pointless that we vote, as the ratings agencies, financial lobbies decide the governments?" he asked in a video on Facebook.

Meanwhile the League's chief Matteo Salvini also criticised the president's decision, calling for mass protests and accusing Brussels and Germany of meddling.

A source from Five Star told Reuters the party could campaign with the League in a fresh vote.