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Italian Prime Minister Mario Draghi has said that he plans to announce a series of measures aimed to reduce the impacts of the worsening economic situation caused in part by rising energy costs.

Draghi said at a press conference after meeting with leaders of the country's main trade unions that he discussed with labor leaders changes to the tax system, wage hikes to help offset rising prices, and other economic incentives, Xinhua news agency reported.

The Prime Minister also called for "stable structural interventions" to reduce the impacts of inflation, and for "the full participation" of the country's trade unions in the reform process, saying he would be ready to present his full plan of economic incentives on July 23.

Draghi's meeting with labor leaders Tuesday was considered by local media as a step to soften current political risks.

The populist Five-Star Movement, a senior partner in Draghi's ruling coalition, has splintered into two separate parties in recent weeks. Former Prime Minister Giuseppe Conte, also leader of the Five-Star Movement, recently made a series of demands under threat of pulling his party's support for the government and forcing a confidence vote, perhaps as soon as Thursday.

"It is not possible to govern under the threat of an ultimatum," Draghi told the press conference, adding that he would not agree to form a new government without the participation of the Five-Star Movement.

Draghi downplayed the economic challenges when talking to the Foreign Press Association later on Tuesday, saying the government's balance sheets were "very strong" and that despite recent difficulties, "Italy remains a strong country."