Italy could be headed for another election this summer

Aaron Brown
May 11, 2018

News that a new coalition government in Italy is likely to be formed by the anti-establishment 5-Star movement and the anti-immigrant League has hit the prices of Italian assets as both parties favor fiscal stimulus.

Two months after the inconclusive March 4 election, President Sergio Mattarella urged Italy's deadlocked political leaders to back the "government of service" until at least the budget is passed by December 31.

If fresh elections take place in the coming months, Mr Ferrata says they could produce a more decisive result than in March, with either of the two populist rivals seizing control.

Thus far the leader of the far-right Lega has refused to drop his ally, Silvio Berlusconi, to join an M5S government as a junior coalition partner.

The anti-establishment 5-Star Movement and far-right League said on Thursday they had made "significant steps" towards forming a government, as Italy looked to end nine weeks of political deadlock.

Luigi Di Maio and MatteoSalvini met again on Wednesday, ANSA repots.

The 81-year-old Berlusconi, who had previously opposed a Five Star-League tie-up, said he would respect a decision of "another political force of the center-right to create a government with Five Star".

Piccoli added that the current impasse could increase support for the populist parties. Afterward, 5-Star lawmaker Alfonso Bonafede said the meeting went "very well" and that they found a lot of common ground on many issues, including on tax cuts and pensions.

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It wasn't immediately clear, though, if the 5-Stars and League had the votes to win a confidence vote in both houses of the Italian Parliament.

Instead he proposed he be given a mandate to form a minority government which would need the support of a few dozen MPs from smaller parties in parliament. "A government of service".

"In this case we certainly can't give a confidence vote, but we will evaluate in a serene and unprejudiced way the operation of a government that might come about", he said. Mr Mattarella wants to hold off a general election for the rest of the year, because the warm weather in the summer could depress turnout and the autumn date would jeopardise the passage of the 2019 budget.

Mr Salvini also rejected the idea of a non-partisan prime minister and called for elections on July 8 if, as seems likely, there's no last-ditch agreement between party leaders.

Some investors, such as Charles Diebel, head of rates at Aviva Investors, said once enough yield premium is built in, Italian debt will remain a buy but it does not bode well for the European Union project.

Opinion polls show the League - the rebranded, formerly secession Northern League, once known for deriding residents of the country's south as beggars, thieves and good-for-nothing rednecks - has gained the most from two months of bargaining.

The elections were a political quake, as they saw populist parties gain more than 50% of votes, while the outgoing government party, the Democratic Party, suffered a historic loss.

Other reports by Free-Prsite

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