EZA 831 Report

11 February 2008

Italy Politics

Snap elections – moving towards a grand coalition


Following the failure of the key parties to agree on electoral reform 04Feb snap elections on 13/14Apr have now been called.
Current polls imply a victory for the Berlusconi coalition of centre-right parties by a relatively wide margin. But this may narrow based on past experience.
The right wing parties Forza Italia and Alleanza Nazionale geared up for elections - running a single campaign on a joint listing ie not competing with one another in any constituencies.
A centre-right coalition victory might appear to be bad news for the markets, given past experience with unstable coalitions, cronyism on the part of Berlusconi and fiscal slippage.
But ultimately the outcome might be positive for reforms and capital markets, given that the elections may lead to a grand coalition between Berlusconi’s Forza Italia, the UDC and the Partito Democratico on the centre-left.


Asset conclusions: immediate assessment is market-negative, given the outlook of Berlusconi win and fiscal slippage, but if elections lead to grand coalition outlook for reforms improves.

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