Italian populist parties have reached an agreement after weeks of tense political jostling

Italy’s two populist parties have reached a new agreement to form a government, days after a standoff with Italy’s president over their stance on the euro abruptly ended an initial bid to assume power.

A joint statement by the anti-establishment Five Star Movement (M5S) and the far-right Lega announced that political newcomer Giuseppe Conte, who had been seen as a controversial choice, was still slated to serve as prime minister. The relatively unknown law professor was due to meet Italy’s president, Sergio Mattarella, on Thursday night.

“All the conditions have been fulfilled for a political, Five Star and Lega government,” said Luigi Di Maio, the Five Star chief, and Matteo Salvini, the Lega leader, in a joint statement after several hours of talks in Rome.

The deal will bring at least temporary calm to a political crisis that has embroiled Italy for weeks. The tumult raised questions – in Brussels and among investors around the world – about whether the rise in Italian populism and the collapse of traditional parties posed a fundamental threat to the country’s future in the eurozone.

A formation of the new government will at least temporarily allay those concerns, because it will remove for now the threat that snap elections will be called later this summer, a prospect which worried investors because it could have bolstered support for anti-EU parties.