Italian Election Update:
Italy’s centre-right alliance has emerged as the strongest group from the general elections with 37% of the votes (after 98% of votes are counted), the 5-star movement (M5S), managed to gain 32.5% of the votes, the centre left coalition that led the country up to the election is the main loser with just 22.9%. On that basis neither group has a majority and the situation is made even more complicated by the fact that the centre right alliance already consists of four parties. Two of these are minor, the other two are Berlusoni’s Forza Italia and the former Northern League, which under new leader Salvini transformed into a right wing party no longer restricted to Northern Italy, but fighting on an anti-immigration platform across Italy.
Indeed under Salvini the party moved to the far right and has aligned itself with France’s National Front and Germany’s AfD. The leader of right wing La Lega, which fought on an anti-immigration platform and managed to transform the originally separatist movement from Northern Italy into a nationwide force, said the “center-right is the coalition that won, it is the coalition that can govern, while adding that he won’t consider “bizarre” coalition with other groups.
In Italy it remains part of the centre right alliance and while there were concerns this morning that the Lega may join forces with fellow Eurosceptics at the M5S, it seems Salvini is more interested in trying to get the top job for himself, after the Lega managed to top Berlusconi’s Forza Italia, leaving Salvini the main candidate for the largest group in parliament. In an alliance with the M5S on the other hand the Lega would by far be the smaller party. It won’t be an easy ride for Salvini, who will need further allies to get a majority, but at least it seems within the centre right group he is toning down his Euroscepticism – already backing away from the suggestion of a referendum on Italy’s membership in the monetary union. Still, the prospect of a Prime Minister Salvini raises concerns of further delays to planned reforms at EU level as well as the Eurozone. Furthermore, the success in Italy could also strengthen populists in France and Germany. Meanwhile there is the risk that Salvini’s government won’t be sufficiently stable to pass urgently needed structural reform within the country itself.
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Andria Pichidi
Market Analyst
HotForex
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