Italy - Politics
Narrow victory for Prodi paves way for new coalitions, negative fallout should be contained The general elections on 9/10 April yielded a razor-thin majority for the centre-left opposition (“unione”) led by Romano Prodi over the government of Silvio Berlusconi both in the Chamber (lower house) and in the Senate. Even so, the outcome may be disappointing for Prodi, both in terms of the size of his majority and the relative strength of the communist party within his camp. Stability of the new government will be of the essence. Signals of support from Berlusconi are positive with a key role to be played by the incoming president - to be elected 18 May. Incumbent president Carlo Ciampi seems the most likely presidential candidate. He could potentially sponsor a grand coalition between centre parties or a caretaker government – rather than a centre-left administration. Key task is to prepare a framework of fiscal consolidation by the middle of the year.
Asset conclusions: broadening support for a centre-left or grand coalition government more positive for economic reforms, negative fallout from narrow election outcome should be contained. Ciampi re-election as president would provide further positive signal.
© Graham Bishop
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