Italy's centre can not govern without the support of populist parties

Violet Powell
March 9, 2018

The outcome de facto handed the leadership of the centre-right to 44-year-old League leader Matteo Salvini, at the expense of 81-year-old Berlusconi.

"We have the right and the duty to govern over the coming years", says Lega party leader Matteo Salvini at a news conference in Milan, on March 5, 2018. After the numbers were released, Di Maio announced that 5-Star will not form a coalition with other parties to form a government.

Led by Luigi Di Maio, the populist 5-Star Movement came out as the main victor of Sunday's poll, with roughly 31% of the votes.

No party or alliance won 40% of the vote, that would have allowed it to form a government; and that benchmark shows how much the mainstream centre-left Democratic Party fell short.

The Milan stock exchange closed down 0.4 percent, with the Mediaset media company of one of the election's biggest losers, three-time Premier Silvio Berlusconi, down 5.5 percent.

League leader Matteo Salvini, 45, has positioned himself as "a proud populist".

Prominent British pro-Brexit figure Nigel Farage congratulated M5S, his allies in the European Parliament, "for topping the poll" as by far Italy's biggest single party.

The longer-term worry for investors is that the Italian election may stoke renewed concern about populist forces in the eurozone, almost a year after many of those were vanquished by the outcome of elections in the Netherlands and France, in particular. Salvini led the League to take 17 percent, ahead of Forza Italia's 14 percent, Giorgia Meloni's Fratelli d'Italia (Brothers of Italy) with 4.3 percent and Raffaele Fitto's Noi con lItalia (We with Italy) with just over one percent.

Euroskeptics and populists rode a wave of hostility toward all things European Union and surged to the fore in Italian elections on Sunday, turning the founding European Union nation into a potential obstructionist just when the bloc was emerging from a decade of economic gloom and seemed poised to rekindle its grand ambitions.

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As the results came in, French far-right leader Marine Le Pen celebrated, saying Europe was having a bad night.

"The team is the centre-right coalition", he said, adding that he would not form "minestrone soup" government, made up of different ingredients.

Italian voters delivered a stinging blow to their country's pro-European political powers, with more than half of the electorate backing populist, euroskeptic parties in Sunday's election, according to near-final results. Renzi, leader of the ruling centre-left Democratic Party, said he was resigning after the party suffered a crushing defeat in Sunday's general elections.

It will now be up to President Sergio Mattarella, a constitutional scholar, to sound out the political parties to determine who has the best chances of forming a government.

Further complicating the path toward a new government are campaign vows by the 5-Stars Movement never to govern in a coalition. Indeed, it is perhaps this ambiguity that has allowed the Five Star Movement to become the real catch-all party in Italy.

Salvini, who never has held public office in Italy, fed public anger at the EU's inability to help Italy handle the hundreds of thousands of migrants who have flooded into the country after being rescued while crossing the Mediterranean Sea. Electoral polls have been showing a growing support for the more populist parties for quite a few months, and the Five Star Movement (M5S) has had a very strong following among the electorate for a while especially in the south of the country.

In Veneto, where it won 11 per cent of the vote in the last elections in 2013, it captured around 48 per cent this time around. But we are a long way from Italy ditching the euro: both anti-establishment parties have toned down their euro-scepticism in recent months and surveys continue to show a popular majority in favour of membership of the single currency.

However, Salvini's latest declaration appears to have ruled out that possibility. Recall last week we warned that any safe-haven seeking on market uncertainty over European politics could benefit the Pound.

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