Italy has become the second European Union country to reject populism after the Greek elections in July, when voters threw out the radical left-wing Syriza government in favour of a mainstream centre-right reformist government. Italy has given the eurozone hope of seeking solutions that sideline populists.

The ditching of Mr Salvini, who aspired to lead a European coalition of populist, eurosceptic parties, will be an enormous relief to Brussels as it focuses on Brexit. Those who wanted to destroy the Union have been marginalised. 

It is a strange world in which Italy suddenly appears to be more politically stable than Britain. Just as British politics has plumbed new depths of chaos and confusion, the Italian parliament has foiled an attempt by a hard-right anti-EU populist party to trigger an early election. A new coalition may be set to restore more harmonious relations with Brussels and the rest of the EU, thereby bringing to an end Italy’s latest political crisis.

Given Italy’s remarkable political volatility there is no guarantee the new government will last very long. Giuseppe Conte, a law professor who had never been involved in politics before becoming prime minister, now finds himself at the head of Italy’s 67th government in 73 years.

The two new coalition parties – Five Star and the centre-left Democratic Party – who until now have been sworn enemies, have agreed a broad 27-point plan which, though short on specifics, appears to frame an encouraging path ahead.

But Italian politics is never straightforward. Former prime minister Matteo Renzi has threatened to split the Democratic Party by launching his own party and taking many Democrats with him. More than half of its MPs and Senators are said to be loyal to him. Encouragingly, Mr Renzi has said his new group would continue to back the government and claimed it would even strengthen it.

There is certainly plenty of scope for the coalition to fall apart, not least the immediate need to agree a 2020 budget where they will need to find €2 billion of savings if they are to keep the budget deficit broadly in line with Eurozone rules while simultaneously sticking by their shared desire to scrap a planned increase in VAT due to take effect next year.

There is little expectation that the new government will pursue the structural reforms – including overhauling the inefficient public administration and dysfunctional justice system – that Italy needs if it is to improve its persistently low growth rate and thereby lower its debt burden.

But at the time of writing, Italian 10-year bond yields have fallen by three per cent while the spread has narrowed to the lowest since the previous League and Five Star coalition took office. Given the massive size of Italy’s public debt, such a large fall in bond yields delivers a real economic boost since every 0.1% fall in yields equates to more than €20 billion saved in interest costs.

Italy’s vast public debt has hung like the Sword of Damocles over the eurozone as the markets have fretted about its sustainability, or at least the willingness of successive Italian governments to do what is necessary to maintain its viability by keeping budget deficits low.

This vulnerability has been exacerbated by the endemic weakness of the Italian banking system, which Rome was too slow to address.

Italy has already shown how quickly confidence can be restored following a self-inflicted crisis

Ever since the start of the eurozone crisis, the possibility of a full-blown Italian financial meltdown has filled European policy makers with foreboding, given that the economy is simply too big to fail. Provided the coalition government can hold together, the creation of this new government is a positive step. Quite simply, it means that the single biggest risk to the survival of the eurozone over the last decade has substantially receded.

The incoming government has promised not to endanger public finances and Mr Conte has given the job of finance minister to the Democratic Party MEP Roberto Gualtieri, the respected head of the European parliament’s economic affairs commission.

The new government’s attempts to set a fresh budget will also be made easier by the fall in borrowing costs, which could drop even further when the European Central Bank restarts its bond-buying programme in response to the global economic slowdown.

It is also likely to be aided by the imminent arrival of a new EU Commission led by Ursula von der Leyen, who has proposed that the EU should take a more generous approach to applying the EU’s fiscal rules.

That could give the new Conte government sufficient fiscal headroom to deliver its twin objectives of cutting taxes and introducing a minimum wage without having to implement the VAT increase. Rome and Brussels can probably avoid another stand-off over the Italian budget like the one which did so much damage by undermining confidence in the Eurozone over the past year.

Nonetheless, Mr Salvini – whose party still leads in the polls – will no doubt continue to wait in the wings ready to return to power if the coalition falls apart. Although it may still be too early to be sure, months of Brussels- and Euro-baiting and migrant crackdowns in Italy are expected to end under the new coalition government’s approach to migration, always a key factor in Italo-Maltese relations. The recent landing of migrants in Lampedusa from a rescue vessel is a hopeful sign.

The changes are immediate in the interior ministry, from where Mr Salvini spent 15 months raging against migrants to his millions of Facebook fans and ran his campaign to keep migrant rescue ships out of Italian waters.

The interior ministry has been handed over to Luciana Lamorgese. She has a record of integrating migrants and a firm belief that different cultures enrich society. With no social media accounts to use as a megaphone, she seems to be the polar opposite of Mr Salvini, who delighted in using funds earmarked for migrants’ education to build deportation centres.

Italy has already shown how quickly confidence can be restored following a self-inflicted crisis. When opposition parties work together in parliament to replace a populist government pursuing a path of confrontation with the country’s closest partners in the EU with one that is willing to seek cooperation, anything becomes possible.

Italy is not yet fully out of the woods, but the auguries are better than they were a few months ago. Regional elections in November will provide the next test.