ITALY was mired in fresh political chaos Sunday after the populist parties’ bid to take power collapsed with the president set to appoint Monday a pro-austerity economist to lead a technocrat government ahead of new elections.

President Sergio Mattarella vetoed the nomination of fierce eurosceptic Paolo Savona as economy minister, enraging the anti-establishment Five Star Movement and far-right League and prompting their prime minister-elect to step aside.

“I have given up my mandate to form the government of change,” said lawyer and political novice Giuseppe Conte, 53, plunging the country into a political crisis nearly three months after March’s inconclusive general election.

Mattarella said he had accepted every proposed minister except Savona, who has called the euro a “German cage” and said that Italy needs a plan to leave the single currency “if necessary.”

The leaders of Five Star and the League, Luigi Di Maio and Matteo Salvini, denounced the veto, decrying what they called meddling by Germany, ratings agencies and financial lobbies.

Mattarella has summoned Carlo Cottarelli, an economist formerly with the International Monetary Fund, for talks later yesterday, with a temporary technocrat government on the table as Italy faces the strong possibility of new elections in the autumn.

Cottarelli, 64, was director of the IMF’s fiscal affairs department from 2008 to 2013 and became known as “Mr. Scissors” for making cuts to public spending in Italy.

He will struggle to gain the approval of parliament with Five Star and the League commanding a majority in both houses.

“They’ve replaced a government with a majority with one that won’t obtain one,” said Five Star leader Luigi Di Maio to supporters at a rally near Rome.

A former judge of Italy’s constitutional court, Mattarella has refused to bow to what he saw as “diktats” from the two parties, which he considered contrary to the country’s interests.

He had watched for weeks as Five Star and the League set about trying to strike an alliance that would give Italy’s hung parliament a majority.

Mattarella said that he has done “everything possible” to aid the formation of a government, but that an openly eurosceptic economy minister ran against the parties’ joint promise to simply “change Europe for the better from an Italian point of view.”

(SD-Agencies)