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Italy's 5-Star, League granted more time to find government deal

ROME (Reuters) - Italy’s anti-establishment 5-Star Movement and far-right League won more time on Monday to put together a government, amid suggestions they were struggling to agree on a prime minister to enact their big-spending policies.

Looking to end 10 weeks of deadlock following inconclusive elections, the two parties had been expected to present their coalition plans and the name of their candidate to head the new administration at a meeting with President Sergio Mattarella.

But after spending barely 30 minutes in Mattarella’s office, 5-Star leader Luigi Di Maio told reporters that their programme was still a work in progress. He also declined to say who might be their choice of prime minister.

“We agree we have to move quickly, but as we are writing what will be the government programme for the next five years, it’s very important for us to do it as well as possible, so we told the president we needed a few more days,” Di Maio said.

The president granted the request and, in a sign it might still take some time before a new government is installed, the League said it would hold an informal referendum of its voters on May 19 and 20 on any deal. 5-Star has also said it will put any accord to an online ballot of its members.

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The two parties are looking to implement massive tax cuts, abolish unpopular pension reform and introduce new welfare payments to Italy’s growing army of poor.

They have said they are ready to battle European Union budget restrictions to drive through their programme in the face of concerns it could weaken finances in the country with the second-largest debt pile in Europe.

Mattarella, normally a low-profile figure, warned at the weekend about the importance of running sound public finances and maintaining Italy’s traditional pro-EU positions.

The president, who has the final word on nominating a premier, has also reminded both sides that he is not obliged to accept their recommendation for prime minister.

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Both Di Maio and League leader Matteo Salvini have agreed to abandon their own ambitions to lead the government, but crossed vetoes appear to have scotched an array of other candidates.

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A 71-year-old university professor, Giulio Sapelli, was briefly in the spotlight on Monday, saying he had spoken to both leaders and was willing to do the job, but within minutes a 5-Star source denied he was their pick for the top office.

After their separate meetings with Mattarella, Di Maio and Salvini denied that disagreements over who should be premier were to blame for the delay in reaching a coalition pact.

“We’re not discussing names. I’m proud that we are discussing, even heatedly, about the kind of Italy we want to create,” said Salvini, adding there were differences on issues including immigration, justice reform and infrastructure.

He told reporters he also wanted the incoming government to stand up to European Union rules, which his party has repeatedly blamed for Italy’s anaemic economy.

“Either I manage to create a government that renegotiates these external constraints or it’s a book of fairy tales and I don’t want to take anyone for a ride.”

The economic promises made by both parties during the election campaign seem incompatible with Europe’s budget rules, though markets have so far seemed relatively unfazed at the prospect of the nascent coalition.

5-Star emerged as the largest party after the March 4 vote, while the League was part of a centre-right bloc that won the most seats. The two agreed to seek a deal between themselves last week after all other options dried up.

Writing by Crispian Balmer; Editing by Catherine Evans and Hugh Lawson