Finnish Prime Minister Jyrki Katainen said Italy's political gridlock following its inconclusive elections risks unravelling years of crisis-fighting work.
Failure to commit to responsible fiscal policy could reignite market turmoil and result in losses that would be “too terrible”, Katainen said. Italian bond yields surged after elections this week delivered a four-way parliamentary split. Pier Luigi Bersani, the top vote-getter, has resisted engaging former Premier Silvio Berlusconi and said he would seek to hammer out a compromise with lawmakers elected under the upstart political movement of ex-comic Beppe Grillo. “In the Italian economy, the challenges are very extensive”, Katainen said. “It’s not possible to close your eyes and forget about them. They need structural reforms, competitiveness reforms, budgetary balancing. They’re hard resolutions, but unavoidable.”
Continuing “responsible fiscal policies” is “primarily a question of Italians’ well-being”, Katainen said. “It also has a huge impact on the European economy. Countries that have done a lot to fix their economies, like Spain, Portugal and Ireland, they deserve to see those actions count and not be shaken by actions of other countries.”
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