Nervy Europe watches on as Italian populists, far-right continue govt talks

Italian anti-establishment and far-right leaders are inching closer to a deal over a joint government under the watchful eye of Europe as they meet on Saturday to hash out a deal that could be announced as soon as Sunday.

Matteo Salvini, leader of the nationalist, strongly eurosceptic League, and head of Five Star Movement (M5S) Luigi Di Maio are set to meet in Milan on Saturday to continue talks over a "German-style" government contract, which both hope to sign "as soon as possible."

They may report on the progress of their talks as early as Sunday to President Sergio Mattarella, who could then nominate the new prime minister on Monday. That person is unlikely to be either Salvini or Di Maio.

On Friday Italian media reported Di Maio's political advisor Vincenzo Spadafora speaking of a tight team with "less than 20 ministers", but no names have been revealed.

The composition of the government team will be influenced by the number of seats held by M5S, which is more than Salvini now that he will take part in this proposed government separately from the right-wing coalition that won 37 percent of the vote on March 4.

'Significant progress'

On its own, the League picked up 17 percent, while the M5S is by far Italy's largest single party after conquering nearly 33 percent of the electorate.

"We are making significant progress on the government programme by finding broad points of convergence on issues that are important to Italians," said Di Maio after meeting Salvini in the lower house Chamber of Deputies on Friday.

Italian media report that both parties agree on rolling back increases to the age of retirement, while the M5S is willing to follow the League's hardline anti-immigration policies.

Salvini and Di Maio are also willing to make compromises over their flagship policies -- the League's drastic drop in taxes and the M5S's universal basic income -- which look tricky to reconcile in the eurozone's second most indebted country.

Spadafora emphasised the M5S's desire for Italy "to stay in the euro and in Europe," despite wanting to rediscuss "some treaties."

The EU is one of Salvini's favourite targets, with the 45-year-old making alliances across Europe with other anti-union figures like Viktor Orban and Marine Le Pen.

Warning

Salvini's possible entry into government has attracted attention in Brussels, and Mattarella, who alone has the power to appoint the executive, warned the parties against nationalism.

"To think that we can get by alone is a pure illusion or, worse, a deliberate deception aimed to sway public opinion," Mattarella said at State of the Union conference in Florence on Thursday.

At the conference on Friday was EU parliament head Antonio Tajani, who would have been Silvio Berlusconi's prime ministerial nominee had right-wing coalition partner Salvini's League not won more votes than the 81-year-old media mogul's Forza Italia party.

"Being a good Italian also means being a good European citizen. It needs to be repeated out loud, especially now," Tajani said.

"Leaving the single currency would be shooting oneself in the foot," added Tajani, in what appeared to be a direct warning to the League.

Di Maio, who has softened the M5S's stance on the EU since being named leader, shot back at Tajani on Friday, saying that "maybe those who see a threat to Europe in this government actually see a threat to their position."