Italy's president set the country on a path back to fresh elections on Monday, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and to pass the next budget. The decision to appoint Carlo Cottarelli to form a stopgap administration sets the stage for elections that are likely to be fought over Italy's role in the European Union and the euro zone, a prospect that is rattling global financial markets.
The focus of the news from Italy this weekend will be political: there's a referendum on constitutional reform and the Prime Minister, Matteo Renzi, has said he will resign if the proposals are rejected. This could be followed by new elections which could in turn benefit the Five Star Movement, an anti-Euro group led by the former comedian Beppe Grillo.
The Italian economy contracted by 0.2% in the second quarter of 2014, Istat said Friday, confirming the continuation of the country's longest postwar recession. GDP was down 0.1% in the first quarter, it added. Likewise deflation hit Italy in August for the first time in more than 50 years, while unemployment rose again in July by 0.3% over June to 12.6%.