Italy was plunged into fresh political chaos as the president prepared Monday to appoint a pro-austerity economist as leader after a bid by two populist parties to form a government collapsed.

The crisis was sparked when President Sergio Mattarella vetoed the nomination of fierce eurosceptic Paolo Savona as economy minister, enraging the far-right League and leading to the anti-establishment Five Star Movement calling for his impeachment.

The decision led to prime minister-elect Giuseppe Conte stepping aside, exacerbating the political turmoil 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 has said that Italy needs a plan to leave the single currency “if necessary”.