Italian Elections: Tentative progress in the making - ING

A Five Star Movement and Centre-right ticket now seem the obvious starting point for the Italian government formation guessing game, according to Paolo Pizzoli, Senior Economist at ING.

Key Quotes

“Putting it in place will require a strong willingness to compromise on both camps. Easier said than done.”

“The election of the presidents of the two houses of the Italian parliament turned out smoother than feared. After some inconclusive votes on Friday, when all parties were still testing ground, the solution to the puzzle was found overnight, with an agreement between the Five Star Movement (5SM) and the Centre-right coalition.”

“When the voting process resumed on Saturday, it was soon apparent that the parties involved in the agreement will stick to their word. In a couple of rounds, Roberto Fico, a top representative of the left-hand of the 5SM, was elected as the new president of the House of Deputies, supported by its party and by the whole centre-right. PD’s MPs continued supporting their candidate, instead. The same agreement made Elisabetta Casellati, a long-term Forza Italia lawmaker the speaker of the Senate.”

“After the election of the two presidents, the outgoing PM Paolo Gentiloni submitted his resignation to President Mattarella, who asked him to remain as a caretaker for the time being.”

“In our view, the road to a future government is far from smooth.”

“The possibility of a 5SM - Centre right alliance has become the obvious starting option for the government formation guessing game. Reaching the same agreement for a new "political" government will require more willingness to compromise on both sides. Redline crossing would become almost inevitable, with a substantial risk of disappointing an electorate which had been attracted by strong calls. Notwithstanding some similarities in public order and migration themes, differences in programmes remain substantial on key economic issues: the so-called citizenship wage, one of the 5SM's strongest campaign themes and the Centre-right's flat tax idea look scarcely compatible.”