League leader Matteo Salvini and 5-Star Movement leader Luigi Di Maio are insisting they are close to a deal created to help ordinary Italians.
The two parties held a sixth day of negotiations aimed at creating a government and ending 10 weeks of political stalemate following an inconclusive election on March 4. Late on Tuesday, a draft coalition programme leaked.
Europe's, and especially the eurozone's, biggest fear is that Italy plunges into the kind of economic meltdown that in 2015 came very close to catapulting Greece - led, remember, by a radical-left government that was hellbent on overthrowing the eurozone's rules - out of the single currency.
Anti-EU “barbarian” Salvini announces Italian govt deal close
"We need to be able to speak with a single voice, to say to the European Union, to which we pay many billions of euros every year, that for us Italians come first", the League's economics chief Claudio Borghi said, echoing US President Donald Trump's rallying cry "America First".
The 39-page draft, obtained by Huffington Post Italia, reflected the difficulties the two pre-election rivals face in finding the resources needed to pay for promises they made to their voters during the campaign. The League has pledged to introduce a flat tax rate of 15 per cent, which would lower tax revenues by some 80 billion euros ($95 billion) per year, according to some estimates, while 5-Star has pledged new welfare payments for the poor costed at 17 billion euros.
Italy's borrowing costs jumped on Wednesday and the country's stocks slid after reports that the two parties seeking to form Italy's next government might seek debt forgiveness, while the US dollar rallied further to a five-month high.More news: Kenyatta signs law criminalizing fake news
The dollar stood tall against a basket of currencies on Thursday, as the euro retreated to a five-month low on concerns the political developments in Italy could cause wider disruptions in the common currency bloc.
The Five Star Movement's Luigi Di Maio after talks at the presidential palace.
Brussels has called on the next Italian government, which is likely to be formed by Eurosceptic parties, to remain on the "European path" and not tear up the EU's strategy for controlling migration. The text confirms that both parties want an "immediate withdrawal" of European Union sanctions against Russian Federation, to which both parties have grown close.More news: Jacqueline Fernandez & Salman Khan Tease Us With HOTNESS!
Both parties have a history of Euroscepticism.
European Commission President Jean-Claude Juncker and German Foreign Minister Heiko Maas agreed on Friday to use the already available options to circumvent the required EU member states' unanimity when it comes to addressing foreign challenges including the Syrian war. It might also dismay Italian President Sergio Mattarella, who has repeatedly stressed the importance of maintaining a strong, pro-European stance.
"While the situation in Italy is a concern for currencies, the 5-Star Movement sees Britain struggle with its European Union exit plan and is unlikely to pursue a similar agenda". However the League still wants to leave the euro zone as soon as is politically feasible. They also share an anti-establishment sentiment that has taken root in Italy but which has worldwide parallels such as Britain's vote to leave the European Union and the USA election of President Donald Trump.More news: Five people found dead inside Denton home
The 5-Star Movement, founded less than a decade ago by an Italian comedian as an experiment in direct democracy in defiance of Italy's traditional parties, says any coalition deal must pass muster with its supporters.